Money Management Plan for Scalping Forex

Plan

Account balance divided by margin + stop loss = trading plan
Assume that margin on EURUSD = $77
Maximum stop loss will be 10 points
Assume an account balance of $500. 
Margin + stop loss (77+10) we will trade 1 contract 1 *87= $87 (round to $90)
Have $10 max risk on any one trade.

Goal

Grow trading account geometrically.
This is done by asymmetrical leverage (as we build the account we will increase the contract size)
In order to increase the contract size we need to profit by margin amount.

Phases

Phase 1
Let’s take our goal of $90.00 and try to achieve this over 5 trading sessions. The goal for today becomes $18.00
Forex (mini) pays $1 per point.
What is the easiest way to make this goal?
We have 1 contract so we are generating then $1 per point.
Why not consider:  Taking profits on 9 points: 1 x 9 = $9 – twice in one session.  Taking fast profits on 6 points: 2 x 6 = $6 – three times in one session.
Either way we choose we hit goal and are done for the day after only two or at most three trades
Ok, so 10 or maybe 12 sessions go by and assuming we have followed these simple rules we now are ready for phase two.

Phase 2
We have now increased our account balances from 500 to $590 in about a week. We did this by taking small, consistent, and easy to get scores. We have built our accounts by accretion. We now are moving up to 2 contracts. This increases our risk on any given trade to $20. And using the same rules as above we determine our next goal to be $180.00. That is the 90.00 margin x the 2 contracts we are trading. Using a 5 day window again we say that our goal for today is $36.00 Trading 2 contracts we are now generating $2 per point.
We need then only 18 points in any given day to make goal  9 points x 2 contracts = $18 – twice in one session  6 points x 2 contracts = $12 – three times in one session Either way it equals $36.00.
What you are actually doing now whether you realize it or not – is you are waiting for the trade to come to you. 5 sessions later, or a few days here or there to account for slippage and bad trades, we are ready for phase three.

Phase 3
Our accounts that began with a paltry $500.00 are now worth $780.00 in about 2 weeks. The methodology should now be sinking in for you. We are now moving up to 3 contracts. 3 x 90 margin = $270.00 for phase three. And during this phase any trade we take is going to cost us $30.00.
The goal per session now is $54.00  At 3 contracts we are generating $3.00 per point, 9 points x 3 contracts = $27 – twice in one session, 6 points x 3 contracts = $18 – three times in one session.

Phase 4
Our account balance has now reached $1050.00. 
Our goal for this phase is 4 contracts x $90 = $360.00.
Daily goal has gone from $18 in phase one to $72 for this phase.
At 4 contracts we are generating $4 per point, 9 points x 4 contracts = $36 and twice a day this makes goal.  6 points x 4 contracts = $24 and three times in one day makes goal. Geometric growth.

Phase 5
Account of $500.00 has now reached $1410.00.
The goal for this phase is 5 x 90.00 = $450.00. Our max risk on any entry is up to $50.00 now, so we are becoming much more judicious on our entries. 
Daily goal has risen to $90, is now paying us $5 per point, 9 points x 5 contracts = $45 and twice a day makes goal, 6 points x 5 contracts = $30 and three times a day makes goal. Time for phase six.

Phase 6
At this point we are not so much focused on the end game, as we are on the phase at hand. What we are focused on is clearing out the goal of this phase, which is 6 x 90 = $540.00. Max risk per trade has risen to $60.
Our account has grown from the original $500.00 to $1950.00.
Daily goal is now $108, is paying $6 per contract, 9 points x 6 contracts = $54 and twice a day makes goal, 6 points x 6 contracts = $36 and three times a day makes goal
We are growing now exponentially and continuing to be even more cautious about each entry, as we move in to phase seven.

Phase 7
Account $2400.00.
7 contracts, which means we are risking $70 on every entry.
The goal for phase seven is now $630.00 and we are allowing a max loss per trade of $70.
Daily goal becomes $126.00, is paying now $7 per point, 9 points x 7 contracts = $63 and twice a day that makes goal, 6 points x 7 contracts = $42 and three times a day that makes goal

Phase 8
8 contracts. That means using our rules we are looking at an initial risk of $80.oo per entry.
And the account is now worth $3030.00, because we have moved to 8 contracts the goal for this phase is $720.00
Daily goal then is $144.00, is now paying $8 per point, 9 points x 8 contracts = $72 and two winning trades in a day makes goal, 6 points x 8 contracts = $48 and three winning trades in a day makes goal At the end of phase eight our $500.00 account is now worth $3750.00.

Phase 9
The trade now is $90.00. Goal for this phase is 9 x 90.00 = $810.00.
Daily goal is now $162.00, is paying $9.00 per point, 9 points x 9 contracts = $81 and two winning trades in a day makes goal.  6 x 9 contracts = $54 and three winning trades in a day makes goal. Accomplishing phase nine brings account to $4560.00

Phase 10
Risk per trade is $100.00.
Goal for phase is 10 x 90.00 = $900.00, daily goal for this phase is $180.00, is now paying $10.00 per point, 9 points x 10 contracts = $90 and twice a day meets goal. 
6 points x 10 contracts = $60 and three trades in one day makes goal.
Account balance at the end of phase ten is $5460.00.
So at the end of 10 weeks you have multiplied your account 10 fold

Phase 11
The goal for this phase is 11 x $90 = $990.00. Maximum risk per trade is now up to $110 per trade. • Daily goal is now up to $198.00 • is now paying $11 per point • 9 points x 11 contracts = $99 and 2 winning trades a day makes goal. • 6 points x 11 contracts = $66 and 3 winning trades a day makes goal When we have finished phase 11 the account balance has reached $6450.

Phase 12
12 contracts, risk to $120.00 per trade.
Goal for this phase is $1080.  Daily goal now $216.00, now pays $12 per point,  9 points x 12 contracts = $108 and two winning trades makes goal.  6 points x 12 contracts = $72 and three winning trades makes goal
At the end of phase twelve we have an account worth $7530.00

Phase 13
13 contracts. Maximum risk per trade is now at $130.00 per contract.
Goal for this phase is 13 x 90.00 = $1170.00.  Daily goal now up to $234.00, now pays $300 per point • 9 points x 13 contracts = $117 and two winning trades a day makes goal.  6 points x 13 contracts = $78 and three winning trades a day makes goal. As this phase comes to a close your account will have grown to $8700.00

Phase 14
Moving up to 14 contracts, goal for this phase is 14 x 90.00 = $1260.00. Maximum risk per trade is now $140.00 Daily goal for this phase is $252.00 now pays $14 per point 9 points x 14 contracts = $126 and two wining trades a day makes goal.  6 points x 14 contracts = $84 and three winning trades a day makes goal. Successful completion of this phase brings your account to $9960.00

Phase 15
Goal for this phase is 15 x 90.00 = $1350.00. Maximum risk per trade has grown to $15.00 per trade.  Daily goal for this phase is $270.00 • now pays $15 per point 9 points x 15 contracts = $135.00 and two winning trades a day makes goal.  6 points x 15 contracts = $90 and three winning trades per day makes goal. Completion of phase fifteen brings your account balance to $11310.00.

Phase 16
We are up to 16 contracts. That makes our risk per trade now $160.00. Goal for this phase is 16 x 90.00 = $1440.00 Daily goal has grown to $288.00 is now paying $16 per point 9 points x 16 contracts = $144.00 and two winning trades a day makes goal.  6 points x 16 contracts = $96 and three winning trades per day makes goal Phase 16 Account $12750.00.

Phase 17
17 contracts x 90.00 Goal for this phase has reached $1530.00.
Maximum risk on each trade has grown to $170.
Daily goal is now $306.00 is now paying $17 per point 9 points x 17 contracts = $153.00 and two winning trades in a day makes goal.  6 points x 17 contracts = $102.00 and three winning trades in a day makes goal. Having completed phase seventeen account is $14,280.00.

Phase 18
Risk per trade is $180.00
Goal for this phase is 18 x 90 = $1620.00 • Daily goal is $324.00 is now paying $18 per point. 9 points x 18 contracts = $162.00 and two winning trades in a day makes goal. 6 points x 18 contracts = $108.00 and three winning trades in a day makes goal. The completion of phase eighteen will have brought the account to $15,900.00

Phase 19
19 contracts, each trade will carry a risk of $190. 19 x $1200 = $1710
Daily goal for this phase is $342 is now paying $19 per point. 9 points x 19 contracts = $171.00 and two winning trades a day makes goal 6 points x 19 contracts = $114.00 and three winning trades makes goal. Completion of this phase will bring our accounts to $17,610.00.

Phase 20
Life is getting good here and we are going after 20 contracts now. The risk per trade moves up to $200.00 and the our goal for this phase then is 20 x 90.00 = $1800.00
Daily goal for this phase will climb to $360 is now paying $20 per point 9 points x 20 contracts = $180 and two winning trades in a day makes goal • 6 points x 20 contracts = $120 and three winning trades in a day makes goal.
Accounts $19,410.00

Phase 21
Risk per trade $210.00.
Goal for phase becomes 21 x 90.00 = $1890.00
Daily goal now is $378 now pays $21 per point 9 points x 21 contracts = $189 and two winning trades a day makes goal.  6 points x 21 contracts = $126 and three winning trades in a day makes goal.
Account $21,300.00.

Phase 22
22 x 90.00 = $1980.00
Risk per trade has increased to $220.00.Daily goal for this phase is $396 is now paying $22 per point 9 points x 22 contracts = $198 and two winning trades in a day makes goal. 6 points x 22 contracts = $132 and three winning trades in a day makes goal.
Account balance to $23,280.00.

Phase 23
23 contracts $230.00 per trade.
The goal for this phase is going to be 23 x 90.00 = $2070.00
Daily goal is now $414 is now paying us $23 per point 9 points x 23 contracts = $207 and two winning trades a day makes goal. 6 points x 23 contracts = $138 and three winning trades a day makes goal.
Account $25,350.00.

Phase 24
The Goal 24 x 90.00 = $2160.00. Maximum risk per trade now has grown to $240.00
Daily goal is now $432 • is now paying $24 per point • 9 points x 24 contracts = $216 and two winning trades a day makes goal. • 6 points x 24 contracts = $144 and three winning trades a day makes goal.
Finishing up this phase will bring the account to $27,510.00.

Phase 25
25 contracts per trade is $250. 25 x 90.00 = $2250.00
Daily goal is now $450 now pays $25 per point 9 points x 25 contracts = $225 and two winning trades a day make goal. 6 points x 25 contracts = $150 and three winning trades a day makes goal.
Completion of this phase of our trading plan brings the account balances to $29,760.

Phase 26:
26 contracts. Risk per trade $260.00. 26 x 90.00 = $2340.00
Daily goal is now $468, $26 per point, 9 points x 26 contracts = $234 and two winning trades a day makes goal.
6 points x 26 contracts = $156 and three winning trades a day makes goal.
Our accounts at the end of this phase now total $32,100.00

Final Phase:
Continue on and at the end of week 52 your account should have geometrically grown to 120,300.00.

CONCLUSIONS

As you can see, this was not a get rich quick scheme. I have mapped out a very conservative low risk tactical plan.
But I made this pretty conservative.
Only taking small gains 2 or 3 times a day and then stopping trading.
More aggressive traders can probably reach each phase of the plan in far under 5 days.
It is a method about managing the equity curve which is the one part of having a trading method that most traders never even look at.
We started with a risk per trade off $10, and at its maximum week 52 becomes $520. As you can see the rate of risk stayed constant, $10 per level.
The quantum leap in balances come not from the trading method, it comes from the “managing the equity curve method”.

Financial Notes

The money management can be improved using the ratio method of Ryan Jones and we have created a spread sheet to assist you. Contact the info@tradinglounge.com.au for the Ratio spread sheet
 

Trading Notes

There are many trading systems you can apply this money management, because the markets are ever changing, we find scalping technique using the sublevels from the TradingLevels concept is worth a look to get those 9 points. The TradingLevels is a game of support and resistance and this is the money management plan to go with the levels.
And yes it can take three months of practise scalping the levels as its part mechanical and part discretionary and developing a skill set is require.
TradingLevels - Sublevels