How the Pareto Law Affects Your Trading – Ep 105

January 14, 2022

The Pareto principle states that roughly 80% of consequences and outcomes result from 20% of all causes for any given event, otherwise known as the “vital few”. This principle is also known as the 80-20 rule.

In our first podcast of the year 2022, our host Matt Z breaks down the 80-20 rule (Pareto Principle) and discusses how traders can prioritize what’s important so they can focus on the critical 20% of their trading that can potentially help produce 80% of their results.

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. The risk of loss in trading commodity interests can be substantial. An investor could potentially lose all or more than the initial investment. All traders should use ONLY risk capital. Risk capital is money that can be lost without jeopardizing an individual’s financial security or lifestyle. Only risk capital should be used for trading, and only those with sufficient risk capital should consider trading. Trading is not a consistent income-producing vehicle. Any discussions of trading results should always and under all circumstances be assumed hypothetical. This includes method and results. Any adaptations of trading methods should be done at your own risk.

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