Trading Using 80/20 Rules
Copying the 80/20 rule for traders is a very simple concept for beginners. Copy several low-risk traders and relatively few high-risk investors in eTuye to maximize profits. Having multiple product portfolios can reduce the risk of capital loss. Because bad investments will not completely liquidate your bank.
The basis of this rule is that 20% of the high-risk portion of the portfolio will be significant and produce higher results. Although 80% of low-risk investments may not have special profitability, in order to reduce 20% of high-risk investments, reasonable profits can be created. Obviously, low basic interest rate supports any high-risk investment, so creating stable income is the goal of the investment.
20% is allocated to high-risk investments to generate more lump sum payments. Because generally speaking, high-risk investment is an investment with greater volatility, reaching a higher high point and falling to a lower low point. Although this obviously brings a higher risk(the clue is on the name!) This means that when investing at a lower stock value, less capital can create more capital than less volatile stocks. As a high-risk investment, it does mean that there will be losses sometimes, which is why this investment method only accounts for 20% of your entire portfolio. In addition, as I said before, these losses are the goal of 80% security investment.
The long-term goal of the system is to gradually accumulate wealth. Frequent trading is done by some traders, which will produce better results at the beginning than passive trading. However, in a longer trading period, the safety net of low-risk investment will offset the risks of high-risk investment, leading to a better profit model. Even if the initial stage is a little slow. In addition, the 80/20 approach can further diversify the portfolio to avoid risks. This method is obviously safer and a safer choice for first-time investors.
From the above information, it is a wise choice to follow the 80/20 investment rules. The strategy is to increase investment in the safest and most stable way and minimize risks! You can easily follow this policy by using the copy trader function of e2ye.