PENDING ORDER EURUSDi-1440-2018-7-09 @11-06-15
On the chart you can see a money management tool.  The lines on the chart have text below them to tell you the purpose of that line. The line tells you if it's entry, TP, or stop loss...
The Black dialog square contains the information that I consider important in any trading moment and helps with the execution on the principles I teach in Lcm Money/trade management.

Trades can be executed through the Ea .  For example, in this case we have a sell limit order.  Once the lines for the entry, take profit, and stop are in place, you can click on the order button ( the silver button inside the black dialog box that says...Order sell limit 1.05 lot ).  When you click that button the order is placed....
I'm sure you can find other tools that you may like better and has more bells and whistles.  The point is to make the information easily accessed so as to be able to concentrate on trading rather than all of the aspects of money management...
Of course there is more that can be done with it but you have the highlights....


MONEY MANAGEMENT 2 – When $45 equals $300

MONEY MANAGEMENT 2 – When $50 equals $300
In my last email on money management I gave you some suggestions.  I suggested that, in order to trade without fear and control your risk you should trade 10 cents for every $300 you have in your trading account.  I suggested a risk percentage of no more than 3-5% per individual trade and no more than 25-30% if you are holding several positions.

Starting with an account balance of $300 and putting on a trade with 5% risk means a stop loss of $15.  Now that means, in order to put on one trade will tie up $45 in equity.  That's at 10 cents per pip and a 3% equity requirement to on the trade.  A micro lot is $10,000. 3% margin on that is $30.  Add $15 stoploss to that and we have a total of $45. Therefore, All it takes to put on one trade is $45.

Let's say you open your account with $300.  Let's say we are still learning how to trade and don't want to risk our entire $300.

The $300 is the minimum deposit required to open an account.  After you open the account you can take out $200 to leave $100 in the trading account.  After all, you only need $45 to put on one trade and that means you can put on two trades with $100.  Your remaining $200 is sitting in your bank account.  You can always put what you need into the trading account as needed.
Working with $300 means our total risk threshold for holding multiple trades is $90.  Our Maxim total risk threshold is 30% of our $300.
Two open trades will hit the limit of this threshold.  Then, with $300 working capital we can have two open trades at a time.  Doing it this way helps our discipline.  The psychology is this...The more we have in our trading account the more prone we are to over trade or take lessor trades because we always know there is a cushion.  If we have to go through the process of adding additional funds to the trading account from our $200 in the bank we have a mechanism to short circuit our natural tendency to take more risk than our working capital justifies....
Also, remember that brokers go belly up ( I've lost large sums twice in my career when brokers went bankrupt ).  I've had all kinds of issues dealing with withdrawing my funds from brokers over the last 25 years of trading.  Looking at it from the perspective I've outlined thus far, takes into consideration, not only our own human psychological weaknesses but, situations that can occur when dealing with shady brokers.
  Never let your broker become your banker and when you're trying to make serious money you only need to keep about $2,500 in your trading account.  $5000 max.  The safe way is to grow your account by systematic compounding of winnings. Not by taking larger risk by taking larger trade our capital from $300 to $600 we can go from 10 cents a pip to 20 cents a pip.
Okay, we've double our account from $300 up to $600.  Now, when we double $600, that will mean $1200.  Thus, when we add another contract to our trades it does''t go from 20 cents a pip to 30 cents a pip.  It goes to 40 cents per pip.  If we double the $1,200 up to $2,400 we are then qualified for, NOT 50 CENTS PER PIP BUT, 80 cents per pip.  This is called geometric progression.  doubling works like this...

1=2,  2=4,  4=8,  8=16, 16=32, 32=64, 64=128, 128=256, 256=512, 512=1,024, 1,024=2048, 2,048=4,096, 8,192=16,384, 16,384=32,768, etc...

You see, that is the way to grow our account without feeling we have to consistently nail huge trades.  If we risk $15 we should be satisfied if we make $30.  The profit is double  the risk .  We can apply the same principle of compounding and apply it to risk reward.

We can get as complicated as we want with money management but to be truthful, it's pretty much basic economics of scale that we learn in high school economics.  What is meant by economics of scale?  well, take the examples we've discussed above.  The financially illiterate person, and trust me, that is the person whom always knows more than everyone else and don't know jack...
That financially illiterate person will say, "How does that example help me.  I'm working with $10,000 or more.  You're talking about a low class $300.  You don't hear all that I hear so it happens all the time...If he/she really knew just the basic high school principle of economics of scale and compounding, they would know that it's no different for them.  They just start from a higher number in the geometric progression.
Nothing changes.  Instead of attempting to double $300 they are attempting to double $10,000 in the same exact way as outlined above.
Now you can see that there is no mystery in money management.  The mystery is this...I learned this from floor traders in my first year of trading.  This was the standard of money management before computers.  Before all that fancy money management software.

All that money management software is really designed for those that are managing accounts for others or in a position where they have to justify their trades to others.  But all we have to do is just focus on compounding for each level, step by step.  You know, kind of like actually growing a business.  lol
To sum it up..I can use a $300 example because most traders who come to me have lost money and their account has fallen to $300 to $1000 dollars.  However, even if you have $100,000 , the same that applies for the little guy applies to you...


In money management 2 we learned about the principles of economies of scale applied to money management, Not using your trading account as your bank account and how to calculate your numbers as pertaining to the percentages of scale as an example with compounding/geometric progression.
Here, let's look at some numbers as related to how we can handle our stop risk.  From our example in Money Management 2 we know that we need $45 to put on one trade.  $30 margin and $15 stop = $45.  We are trying to profit $30.  $15 get's you 30.  Profit is twice your risk. If profit is twice your risk you only need to be right 6 times out of 10 to consistently profit over time.  But here is the thing.  How to we want to handle that $15 risk?
We can handle the $15 risk in various ways.  The most common way is to put on the trade at 10 cents per pip to enable a stoploss of 150 pips on the trade.  Okay, here is the thing...where is your law that says the 150 pips risk must be on a single trade. For example:
I can Buy Eurusd with a 150 pip stop and 300 pip Tp/target.  Nothing wrong with that. especially when you are still beholden to the man and don't have the hours to trade the lower time frame charts.  But if you do have the time think about this...What if, instead of 150 pip stop and 300 pip target I did this...
I use a 20 pip stop ( $2 ) instead of a 150 pip stop.  Still looking for the 300 pip target.  Now, I can take the same capital and get 7 tries to get it right before I lose $15.  The 300 pip profit ( $30 ) is 15 x the risk of 20 pips ( $2 ).  Therefore, you can be wrong 6 times = -120 pips ( - $12 ) and correct just once, +300 pips ( +30 ) for a pfofit of 180 pips, +300 gained on the one winning trade - -120 pips on the

6 losers = 180 pips ( $18 ) net gain... Or 125% return on the $15 risk.
The example above is an example of segregating your capital.  It works like this...We segregate $45 to the Eurusd...$45 to UsdJpy...

$45 to GbpAud...etc...  We use the technique outlined above for each pair separately.  Now, we don't have to break the stoploss down to 20 pips.  That number is just an example.  You can break it up any way you like.  Just understand that the numbers are based on ratio.

The ratios I exampled are for 20 pip stop.  if you go say, 30 pip stop the rest of the numbers change according to the prescribed ratios.
These are some of the basic aspects of money management as applied to trading.  Looking at it from my perspective you should be able to see why I cannot give you an answer when you say what should I do.  I don't know YOUR NUMBERS...I don't know what you're working with.  Your system can be a winner but you know nothing about your numbers and if that is the case, you have no plan...If you have no plan how can you win?  I mean, you may say, "Jerry, should I take this trade?".  I can't really give you an answer because I know nothing about what you are trying to accomplish with your numbers.  There are many options.
All this being said I have one question...IF YOU CAN'T DO IT WITH 10 CENTS A PIP, WHAT IN HELL MAKES YOU THINK YOU CAN DO IT WITH $10 PER PIP..  I know some of you are put off when someone just gives it to you straight.  No sugar, no cream...Feels kinda salty.  Guess what...?  The body needs salt to survive.  Now take this salt and wash it down with some common sense and get your numbers together.
I'm your friend and as the commercial says..."FRIENDS DON'T LET FRIENDS DRIVE DRUNK.