TBFX Money Management Rules
Work in progress, 80% done though
At the bottom you can see an example of what my charts look like (screen shot from December 2nd 2012)
Just quickly posting this here for reference and also so newer traders can see
how to use proper money management.
All I can really say about my trading (without going into great detail) is that I
only use the M1, M15, and H4. Any more than three time frames complicates my trading.
I like a "green, yellow, red" - "traffic light" type approach. Simplicity is key for me.
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The only other thing you need to know (or rather contemplate the reasoning why
this is) about money management is the golden rule:
"If you aren't in the green, why use leverage?"<---- not necessarily
meant to be taken literally, but it means you should start off risking absolutely
minuscule amounts until you are in the profit, then ramp up your leverage.
If you cannot go from trading your own money to trading house money using small
amounts of risk, what makes you think you can do it using large amounts of risk?
Pips are pips no matter how large the contract size is. If you can't make pips, you
can't make money. Period!
Read my profile for a little more detail.
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Price Action Strategies
The following accounts have their exits and profit targets based upon price action
around key support/resistance levels, not a fixed amount of pips.
Acc #1 = 80% of trading capital
S/L = 10-20 pips (depending on my entry and recent support/resistance levels)
T/P = 5-50 pips (no set T/P, exit dependent upon on price action)
S/L to BE = Dependent upon price action and size of the range
Leverage = 1:1 first of month capital + 5% of monthly profits. (0.10-0.20% base risk)
Total risked pips per day = 50 pips (2-5 trades)
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Acc #2 = 5% of trading capital
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(too tired to finish but its pretty similar to mechanical #5
Mechanical Strategies
The following accounts are LITERALLY all mechanical (not the entries, but the s/l, t/p and BE are done by an EA).
I do not even look at the P/L I just let the trades ride out. At the end of the day I will see where they ended up.
This is more of an experiment however I am dedicating a decent amount of capital to it, so the experiment
will still follow my "Golden Rule" of "If you aren't in the green,
why use leverage?" The exact same entries are taken as my primary account, except the primary account
has exits taken based on PA, not fixed pip amounts.
The following accounts all share the same parameters.
Risk Per Trade = 0.50% of capital as it stands on the first
day of the month + 10% of the profit from the first of the month until present date.
Maximum Trades Per Day = 4
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Account Set A - Risk/Reward = 1:1
Acc #1 = 2.5% of trading capital
S/L = 5 pips
T/P = 5 pips
S/L to BE = NO
Leverage = 10:1 base (0.5% base risk)
+ additional leverage from monthly profits
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Acc #2 = 2.5% of trading capital
S/L = 10p
T/P = 10p
Trailing Stop = NO
Leverage = 5:1 (0.5% base risk)
+ additional leverage from monthly profits
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Acc #3 = 2.5% of trading capital
S/L = 20p
T/P = 20p
Trailing Stop = NO
Leverage = 2.5:1 (0.50% risk) + additional leverage from monthly profits
Account Set B - Risk/Reward = 1:2
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Acc #4 = 2.5% of trading capital
S/L = 5p
T/P = 10p
Trailing Stop = +4
Leverage = 2.5:1 (0.5% risk)
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Acc #5 = 2.5% of trading capital
S/L = 10p
T/P = 20p
Trailing Stop = +8
Leverage: = 5:1 (0.5% risk)
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Acc #6 = 2.5% of trading capital
S/L = 20p
T/P = 40p
Trailing Stop = +16
Leverage = 2.5:1 (0.5% risk)
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Does not take same trades as #1-6 mechanical accounts. But it does take the same one as account #2 on price action.
This is typically what I would regard as likely being the strongest opportunity for the day.
Acc #7 = 5% of trading capital
S/L = 10 pips (fixed)
T/P = 20 pips (fixed)
S/L to +8 = +10
Leverage = 50:1 + 10% of monthly profits
Trades per day = 1
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