I am sure there are more sophisticated technique than this, other member who is better verse than me can contribute. I just want the profit accumulated to be put in good use if if on a loosing streak, help with the staying power.

Money management is the most important and overlooked subject in trading!

In my opinion, the best money management system for Forex/Futures traders is
outlined in great detail in Ryan Jones' book The Trading Game: Playing by the
Numbers to Make Millions. In this book, he teaches 'Fixed Ratio' money
management. This method, he argues, will help any trading system as long as it
is profitable over time.

This is how to put the fixed ratio money management system into practice:

'FIXED RATIO' MONEY MANAGEMENT

1. Start with the total number of dollars in your trading account. For example
let's say it's 1000 USD.

2. Now pick how many pips profit you need to achieve before you trade with
more lots. Let's say 200 pips (10 pips/day for 20 trading days in a month
average).

3. Now start trading .1 mini lots (which is profit/loss 1 USD). You would only
increase to .2 lots after gaining 200 pips. When you gain 200 more pips profit
you would trade .3 lots etc...

4.Here is an example of how fixed ratio trading would work:

Month 1: $1000 + (200 pips x .1 lot = $200 ) Total: $1200

You start with $1000 in your trading account and after 1 month of trading
you gain 200 pips profit trading .1 lots. You now have $1200 in your
trading account. You are now at the next level. If your account balance
falls below $1200 then you will go back to trading .1 lots.

Month 2: $1200 + (200 pips x .2 lots = $400) Total: $1600

You now start month two with $1200 and gain 200 pips profit trading .2
lots. You now have $1600 in your trading account. You are now on the
next level. If your account falls below $1600 then you will go back to
trading .2 lots.

Month 3: $1600 + (200 pips x .3 lots = $600) Total: $2200

You now start month three with $1600 and gain 200 pips profit trading .3
lots. You now have $2200 in your trading account. You are now on the
next level. If your account falls below $2200 then you will go back to
trading .3 lots.

Month 4: $2200 + (200 pips x .4 lots = $800) Total: $3000
You now start month four with $2200 and gain 200 pips profit trading .4
lots. You now have $3000 in your trading account. You are now on the
next level. If your account falls below $3000 then you will go back to
trading .4 lots.

Month 5: $3000 + (200 pips x .5 lots = $1000) Total: $4000

You now start month four with $3000 and gain 200 pips profit trading .5
lots. You now have $4000 in your trading account. You are now on the
next level. If your account falls below $4000 then you will go back to
trading .5 lots.

RESULTS:

Month 6: $4000 + (200 pips x .6 lots = $1200) Total: $5200
Month 7: $5200 + (200 pips x .7 lots = $1400) Total: $6600
Month 8: $6600 + (200 pips x .8 lots = $1600) Total: $8200
Month 9: $8200 + (200 pips x .9 lots = $1800) Total: $10,000
Month 10: $10,000 + (200 pips x 1 lot = $2000) Total: $12,000

Notice that gaining an average of 10 pips a day, along with fixed ratio money
management helps your equity grow asymmetrically. Your $1000 turned into
$12,000 in 10 months!

Notice that your trading system doesn't have to always hit a home run, you simply need to average 10 pips/day in this example.

If you wanted to be more conservative than the above example, you could simply
add more pips profit in the formula. For example you could only increase
number of lots traded after gaining 400 pips instead of 200 pips like in my
example. This would mean slower growth. Try setting up a fixed ratio money
management plan before you start your next live trade!

The above report was taken from the Euro Fractal Trading system, written by Erol Bortucene of the Day Trade Forex Team.

This unique approach to day trading the EUR/USD involves using financial Fractals and no other technical indicators, as outlined in the Euro Fractal Trading System.

Byline:
Erol Bortucene and Cynthia Macy are co-authors of ?The Day Trade Forex System: The Ultimate Step-By-Step Guide To Online Currency Trading?.

Visit: http://www.daytrade-forex.com

for examples of actual trades using the Euro Fractal Trading System. Learn how easy it is to learn to trade the lucrative forex market from your home pc.
For more comprehensive trading information, visit their other websites at:

http://www.daytradeforex.com
http://www.daytradeforex.com/products.htm
http://www.professionalforextrading.info
http://www.professionalforextradingonline.info
http://www.successtrading2000.com
http://www.successtrading2000.com/forex
http://www.tradecurrency.ca/education.htm
http://www.shortterminvestingsite.com

Published by Cynthia Macy on November 12, 2005 12:57