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The 60:30:10 Principle Explained
Here’s an important secret about the Forex (or any other financial market for that matter) that I bet will surprise you… On average, the markets are in a trending mode only about 30% of the time, breakout mode only about 10% of the time and in a counter-trend, or ranging mode about 60% of the time.
This "60: 30: 10 Rule" exists across all markets and all time-frames !
So in other words, it doesn’t matter if you’re trading the Forex on the 15 minute chart or stocks on a one day chart, the results will be the same:
Trend: 30%
Breakout: 10%
Counter-Trend: 60%
And whether you realize it or not, it’s that 60% column (the counter-trend mode) that is the reason you’re not as profitable as you should be.
But I’ll get to counter-trend trading very soon. First, I want to show you that the "60:30:10 Rule" does, indeed, exist.
Putting the 60:30:10 Rule To the Test
If you want to test the 60:30:10 ratio for yourself, simply place a Bollinger Band (or any other trend indicator) on any chart for any time-frame . Then, add up the candlesticks where the market was in a trending mode (i.e. the bar breaks above or below the band) and divide it by the total number of bars in the trading period and you’ll have your "trending average".
How Does the 60:30:10 Rule Affect My Trading Strategy?
The "60:30:10 Rule" affects your trading strategy in two ways:
1. If you want to maximize your profits, you need to learn to trade in all market conditions (including counter-trending markets), and…
2. We can now capitalize on known "predictable moments of opportunity" (i.e. times when we can determine that the market is trading in one of the three market conditions) to "stack the deck" in our favor.
I’ll talk more about "moments of opportunity" and "stacking the deck" in just a bit, but first let’s discuss the first point which is learning to trade in all market conditions…
FACT: You Have To Be In the Market If You Want to Make Money
Seems obvious doesn’t it?
But when you look at most traders, it’s almost like they’re excited about the 2.4% annual interest rate their money is accumulating by sitting motionless in their account. Now I know, "95% of successful trading is knowing which trades NOT to put on…"
…but give me a break!
Last I checked if your money isn’t in the market, you aren’t making any money. So, if you’re like most traders (who only trade trends and/or breakouts), you now know why you’re in "sit and wait" mode the vast majority of your trading life…
60% of the time, the market isn’t doing what you need it to do to make money!
However, if you learn to trade this type of "sit and wait" trading isn’t just boring and unproductive, it’s also dangerous . You see, unless you’re a super-disciplined professional, you’ll often wind up forcing trades that aren’t there just because you’re hungry for action.
And that’s when the REALLY big losses occur…
Perhaps you’re nodding your head right now because you’ve done this exact same thing before. Or maybe you’re so new to all this that you haven’t had a chance to screw-up big…yet. (If that’s the case, run this scenario by an experienced trader and see what they have to say.)
Either way, if you want to be "in the markets" as often as there are strong opportunities, therefore it’s critical that you find a profitable counter-trend trading system that you can add to your arsenal so you can profit when the market is moving sideways.
kesimpulannya kita kena bole trading dalam apa2 keadaan market utk berjaya...
