CookieMonsta88
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im trading 0.04 lots max for a $120 account with 0.01lot worth of margin for tanking drawdown, specifically for audusd pair, since the margin for this pair is much lesser relative to spreads paid.
so for me I'm doing an acceptable amount of leverage but small dollar amount, the idea is ill invest 5% of actual account size inside forex for margin trading while keeping the 95% inside 1 year treasury bills backed by government or maybe 1month or 6 month kind and those kind of safe investment, coz i can't lose more than the amount i put inside the forex account.
so the treasury bill is sort of locked out of my reach, so even if i lose all my money in my forex account, i sort of have a time window to cool out and then revise again, and just put the interest from the treasury bill back into the forex account and start again while putting the original 95% back into treasury bill.
so for me because of my money management strategy, i will pyramid and buy more if my current trade shows quite good profits. so like I'm 20pips in profit, price pull back 5pips, and shows it might be going to restart the trend, ill buy additional 0.02 lot more, on top of my original 0.02 lot initial entry. so this sort of scales the reward and risk to make it easily 4-5 : 1 risk reward, because of the pyramiding.
e.g. the elliot wave theory, i bought 0.02lots at the bottom of the impulse wave leg 1, price corrects and the wave is leg 2, then when i see that there is a good chance leg 3 can form, i buy 0.02 lots more, though i kind of did a study if u pyramid too hard and too fast there will be too much risk, u can pyramid in this pattern, 1,2,1,1,1,1,1,... with the numbers as multipliers, like 1 unit for me is 0.02 lot, so i would buy 0.02 then as it retrace and i see another impulse wave forming, i buy additional 0.04, then it retrace, and looks like another impulse wave coming in, i buy 0.02, and this way i kind of can skew my average position size sort weighted below the average market price, so as the markets go up, my average price position as i add on will lag behind the markets which is what i want, so its a balance between size and average position price.
however, for me i can only afford 0.04lots max, so i do a variation either 1,1, which is 0.02 lot and if it retraces for me i add 0.02. if I'm not really sure, i do 0.01,0.02,0.01, which is 0.04 lots. so if u have more margin, u can do many variations of it. also the way to attack a trend can vary with ur money management too. like if u want to trade each swing individually, u can do 0.01 buy on the initial impulse wave, then u spot a retrace might be forming, u take profit, then u short 0.01 against the trend to scalp the retrace, so that even if u were wrong on the retrace, u are sort of picking the top, the original 0.01 trade with the impulse should more than pay for ur loss on the retrace and still have some left. then on the impulse restarting, u can enter 0.02, and step it up, since u have profits from today to help u soak some losses if the 0.02 lot turns out to be wrong. u may end the day flat, or end the day with small loss, or end the day with small profit, but if it goes ur way, u should be able to get a lot of profits, as compared to the original type of money management, coz say the original money management u are to risk 0.10 lots, but this one, u scale in so u split into 0.02,0.04,0.02,0.02, so u end up with initial risk of 0.02 lots rather than 0.1 lot. but it takes a lot of practise to get the scaling right, so it depends which one u are more comfortable with.
both the money management i use and the original money management got upside and down side, is just see what time frame u trading, how much time u can commit coz of other commitments to manage the trade, and ur risk level. if u are trend following, the original money management is better, because u want to ride it as long as possible. but if u are trading intra-day this method can afford u more flexibility to sort of minimise ur value at risk and ur profits as to what kind of day are u trading, like a range sort of day, or a strongly trending sort of day. a range sort of day i don't pyramid, i just do the 0.01 and scalp here and there, but if trend i pyramid on.
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