Fund management methods to increase account funds [FX Ogre]

Readers, what do you think is the most important thing in FX trading? Is it the "trading method" such as where to enter and where to exit, or the "mental strength" to always follow the buying and selling rules? Of course, these are also extremely important elements in trading, but interestingly, many professional traders rate "money management" as the top priority.

In this article, we will talk about money management methods to steadily increase account funds without going bankrupt.

Table of Contents

1. What is an appropriate trading lot?
2. What is defensive money management?
3. How much can you grow with simple interest
4. For maximizing profits
5. The power of compound interest
6. Can you win with money management alone

● Characters: 3775 characters (including headings)
● Images: 1

※This article is a re-edited version of the FX攻略.com January 2014 issue

What is an appropriate trading lot?

Generally, how much trading volume do you use for your trades?

Some use 10,000 units, others 1,000,000 units. Against what account funds should you determine the appropriate lot size? In fact, this is the core of money management.

Additionally, the risk management perspective of how much loss you are willing to tolerate per trade or per day is also part of money management.

Regarding trading lot sizes, many things have been said. For example, setting the acceptable loss per trade to 1% of account funds, or determining the lot size so that effective leverage stays within 10x, are well-known ideas.

There are even some unique opinions, such as using a position size that would not break the heart even after five consecutive losses, or a size that feels comfortable to the trader.

The existence of various claims means there may be no absolute correct answer. After all, the setting of trading lots is greatly influenced by the nature of the account funds and the trader's risk tolerance. Considering this, wouldn't you need to experiment and trial-and-error to determine your own appropriate lot size?