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Random article: The Pareto principle in trading

According to official sources, the Pareto Principle was named after the economist and sociologist Vilfredo Pareto, who was born in Paris in 1848, but was Italian by nationality. From 1906, he began to notice certain economic patterns. For example, he noted that 80% of the land in Italy belonged to 20% of the population. Then, he formulated the principle, noting that 20% of the pods in his garden contained 80% of the peas. These and other regularities led to the fact that Vilfredo Pareto developed the “80/20 Rule”, which in general form looked as follows: 80% of the effects come from 20% of the causes.

Popular article: Forex indicators: Force Index

According to A. Elder, 13 periods' Strength Index demonstrates dominating force on the market – bulls or bear - very well. With Force Index (13) above the middle line, bulls rule on the market, whereas FI is below the middle line, bears dominate. With FI dragging near middle line and crossing it a few times, it says about absence of market tendency. New maximum above middle line shows that ascending trend is confirmed. In this respect, a new lowest point below middle line speaks for descending tendency. When with growth or decline of price Force Index (13) starts giving decreasing extreme points – essentially, forming divergence/ convergence – it indicates that current trend loses its significance and a reversal is probable.

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