Forex Gambit money management. $200.00 of your account is specified as your Reserve. $100.00 of your account is specified as your fractional betting equity, or FB for short.
Define the risk on your trade. Risk on the trade is the difference between your market entry price and your stop-loss protective order. If the difference between your entry price and stop-loss is 54 ticks/pips/points. Your risk is 54.
Whenever the FB is large enough we will bet fractionally:
Risk 15% of the FB on the trade.
If your FB is $100.00, and your risk is 54, and the pip value of 1 lot is .10 (10 cents), 54 x .10 = $5.40. $5.40 x 3 is $16.20, close to 15% of your FB. So, you would trade 3 lots.
If your FB drops to a level were 15% risk would be less than or equal to 1 lot, trade only 1 lot. Continue to trade only 1 lot until your FB increases to the point where you can once again trade multiple lots.
As your FB increases, bet 15% of the new FB.
Remember, the FB is always the amount in your account that is in excess of your $200.00 reserve. If your account drops below $200.00, you must bet only one lot, until your account increases and gives you in excess of $200.00, giving you the ability to once again trade FB.
That’s all there is to it!!!