I have had some questions about Money Management. So here goes:

The things you need to know are:

1. What stoploss you plan on running. I have found 50 works good for most pairs.

2. How much capital you plan on using.

3. What your leverage is. Most mini accounts are 200:1

4. How much of your capital you plan on risking (in percent).

Now in the examples above, i generally calculate my total lot size available based on a few ideas:

1. If i trade say 6 pairs, i plan on having 3 of them going wrong on the first level (or initial lot size). This is not to say i will have 1/2 of them wrong, but we want to budget for it so that way we are still in MM.
2. The odds of a trade going wrong twice in a row is extremely rare, so we do our main MM calculation on having 3 trades running Martingale size lots, and 3 running initial size lots.

Calculations:

The martingale premise is that if we have a TP of 10 and a Stoploss of 50, that means that if i win i earn 10 pips, but if i lose i lose 50. So in order to compensate the next day for a loss of 50 i have to earn the equivalent of 50 at least to break even. So if our Tp is still 10, then 50 / 10 = 5. Now we want a profit so we take 5 and add 1, so we get 6 lots.

So now with this example we know that with a TP of 10 and a SL of 50, the second level trades are 6x as big. With this in order to calculate our total lot demand based on 3 good trades and 3 bad the first day we do:

3 trades @ 6 lots
3 trades @ 1 lot
total = 21 lots
(now remember there are still 2 trades for every pair, so a total of 12 trades, but the respected other side always closes in profit, so we don't count them).

OK, so we budget for 21 lots based on a 1 lot initial size. Now if we have $10,000 worth of funds and want to risk 10%, we are risking $1000 worth.

$1000 / Stoploss = lots available to trade. So in our example on a mini account if we had $10,000 and risk 10% on 50 S/L trades, we can risk a total of 20 lots. this is what is available or we budget for.

Now we take our 20 lots available and we know we need 21, we go 20/21 = 0.95 initial lot size.

So with money management, our $10,000 @ 10% and 50 SL gives us initial trades of 0.95 each, and our second level would be 5.7

Now you can follow along with your risk threshold and amounts to come to your own unique initial lot size. The rules and guidelines are pretty simple and laid out very well in these first few pages here or in the original thread.

Thanx,
Graham