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Tackle Today: The Pareto Principle

February 2, 2021

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DO YOU WANT TO Learn how to trade like A pro?

Last update: August 2021

Embrace the wisdom of the 80/20 rule


According to Wikipedia, the Pareto principle “states that for many outcomes roughly 80% of consequences come from 20% of the causes.” Think about your trading performance, and you’ll see this principle applies to our domain – especially for those using strategies such as long stock, long calls, and other open-ended profit trades.

80% of your profits likely come from 20% of your trades. Or, at least, they could if you let them (letting winners ride and all that). How many stocks did you trade in 2020 that ultimately went on to capture monster gains? Did you fully capitalize on the trend? If not, what can you do better next time?

Taking the time to meditate on these questions will lead you to discover better trading tactics.

Did you know ThinkorSwim tracks and ranks your P/L per ticker symbol? I’ll share a screenshot below to show you. I always find it illuminating to learn which stock yielded the most significant profit (or loss) of the year.


Chart of the Day: Account Statement: Profits & Losses

TOS Account Statement, P/L, profits and losses.

Monitor tab › Account Statement › Profits and Losses. Sort by the P/L YTD column, and you’ll find which tickers have given (and taken!) the most dough from your pocket.

Video of the Day: Developing as a Trader

Watch this video from Coach T where he teaches the process that we all go through to develop our skills as a trader.

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