Not specifically concerned with the forex market, but markets in general, here’s an analysis of money management that well worth checking out. There’s good information on drawdown and how it will affect the (smaller) trader, also some of the subtler points about risk/reward calculation that escape people at times.

Definitely a conservative, low-risk approach – and nothing wrong with that – as a treatise on what to avoid when starting out, definitely worth some careful reading.

Drawdown is the dreaded red – the figures you don’t want, your losses – and we all have losses. The point about drawdown lies mainly in drawdown recovery – You may have suffered a 10% drawdown and are now looking towards recovery – but there’s less capital in your account now – a 10% gain doesn’t bring you back to where you started. Which is easy to forget…

Reward-to-risk ratios are a little more complicated than saying “I’ve set a take-profit at +40 pips and a stop-loss at -20 pips so it must be 2:1…”

Have a look through – money_management.pdf