Once a positive
expectancy is achieved,
good money management
will then be the biggest
factor in determining
how fast and how large
your bankroll grows.

Even a trading system with a positive, but still only mediocre,
expectancy can be turned into a money machine with the right money
management techniques. Money management is a study that mainly determines
how much can be spend on each trade with minimum risk.

For instance, if too much money is risked on a single trade then the size
of a potential lose could be so great as to prevent users realising the
full benefit of their system’s positive expectancy over the long haul.

A good Money Management strategy, combined with the following concept,
makes it more amenable for beginners because it enables them to
advance their trading knowledge in small increments of risk with
maximum account protection. The important concept is ‘do not risk
too much of your balance at any one time‘.

The Strategy, that we recommend especially for beginners,  states that
traders should never risk more than a fixed amount of their total account
on any single Forex trade and, in fact, 5% or less is the maximum advised.

The risk for each trade is kept within these parameters by correctly
determining its Position Size and Stop Loss. Position Size is the amount
of currency to be either bought or sold. Stop Loss determines the
acceptable loss a trader is prepared to take.

 Once a positive expectancy has been gained and the best money management
strategy selected, our plan then advises live trading of the same
configuration settings used during demo. Live accounts can be less
profitable than demo ones because of additional difficulties such as
slippage, re-quotes and larger spreads.

When comparing demo and real money trading, you should determine factors
such as the number of re-quotes, the number of connection errors, spreads
differences and any changes in the expectancy value.

Once success has been achieved with a low-risk operational configuration,
higher risk ones can be introduced using the process outlined above by
altering the settings one at a time. After a series of successful
advancement, you will eventually be able to use your trading system
with the following settings::-

more than 1 lot traded, 10% of your total margin will be traded,
more than one currency pair will be traded and more than one trade can
be active.

Our methodology allows the user to experiment in small increments of
risk rather than jumping into a new system before knowing exactly what
is happening.

If you intend to use a Forex Robot in scalping mode, this plan can
also be used to improve its performance by carefully adjusting its settings.

As you will realise, the above methodology will enforce you to trade very
carefully at low risk for many months if performed properly.
During this time, you will move away from a beginner’s mindset to that
of a more business-like one. The effort will be worthwhile because at the
end you will possess a trading system with a positive expectancy that
will guaranteed you profits over the long term. In addition, you will
know how to make changes to your system in a carefully controlled manner.

Good Luck with your Forex Trading.

If you have any queries, please leave a comment and
I will do my best to answer it.

Regards,

Terry Allen 

Please be advised that Foreign Currency trading involves
substantial risk of monetary loss.

All information contained on this website is provided as general
commentary and must not be constituted as investment advice.

I will not accept liability for any loss or damage, including
without limitation to, any loss of profit, which may arise directly
or indirectly from use of or reliance on this information.