Many traders spend a lot of time trading, but only a small amount of their trades generate the majority of their profits. It’s the old 80/20 rule. 80% of the profit tends to come from around 20% of their activity.
I would bet that a lot of traders make profits on their long-term trades, and then run their short-term trading at a loss – even though that takes most of their energy.
You may think that you can be a lot more profitable trading short-term, but on slower long-term position you can trade much larger sizes, and potentially have a higher winning percentage. Of course, maybe it is the reverse, and your short-term trades do well, and you are holding onto long-term trades that are stuck with big losses – it’s about what’s right for you.
See if you can isolate the things that really work for you. Work out which types of trades are the ones that make you the most profit, and focus on those. Less is often more when it comes to trading. It takes discipline and self-awareness to stop doing what is not working, but you can dramatically improve your trading by focusing on what works best for you, and putting the rest aside.
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders. He is a key team member at premium FX services provider www.fxww.com and part owner of Forex Signal Provider FX Renew (You can get a free trial). If you like Sam’s writing you can subscribe to his newsletter for free.