Yes it’s true. I guess trading the stock market is not exempt from Pareto’s Principle. The 80/20 principle as it is known, or the “law of the vital few”. The few that makes up of majority of the results.
In the movie/documentary, “The Secret”, Bob Proctor paraphrased, “1% of the population holds or controls 80% of the world’s wealth”.
And yes, this principle does hold true for the success rate of people who actually make money in the stock market. Why? It’s the principle at work. Now, it may not come out exactly a 95/5% ratio, but the majority/minority ratio still is in effect.
Why is this important to know? Well, understanding this very fact and principle is the reason and foundation for our success in trading the markets.
In the success ratio of 95% of people lose money in the markets to the 5% who do make money, what would be the intelligent choice of whom to follow and learn from in order to be successful at making money trading the markets? The clear answer is, follow and learn from the 5%.
And that’s what we did. That’s the mentality that me and Danny adopted when building our trading strategy. And this mindset goes for life goals as well.
What do the uber-successful do, in any niche, sport, business, etc., to be as successful as they’ve become? That’s the question you need to ponder on when striving to reach your dreams and goals.
I almost guarantee those uber-successful either do more than what others do, or do the completely opposite or different things than those who are not successful.
Ponder on it for a while and come back here to delve into the 5%’S mindset a bit more.