Sizing, demo, then micro lots

The plan is written. The question now is how to run it without paying tuition you cannot afford. The answer is a staged progression: demo until the plan is mechanical, then the smallest live size the broker allows, then scale on evidence. Each stage has a purpose and a graduation test.

Sizing recap for FX

Every trade in every stage is sized the same way. This is the single calculation to make automatic:

1. Dollars at risk = account balance × risk per trade (0.5% to 1%).
2. Stop distance in pips, from the chart, including a pip or two for spread and normal slippage.
3. Pip value per micro lot in your account currency (Module 2, or the pip value calculator).
4. Micro lots = (dollars at risk ÷ stop in pips) ÷ pip value per micro lot. Round down.

Two things the table shows. First, a $500 account with a 20-pip stop can trade two micro lots and risk $4, which is real risk management on a small account, not a toy. Second, when the rounding-down leaves you at zero micro lots (a $200 account with a 30-pip stop at 1% gives $2 ÷ 30 = $0.067 per pip, which is less than one micro lot), the correct trade size is zero; that is what nano lots or a larger account are for, not a higher risk percentage.

Stage 1: demo

A demo account uses the broker's real quotes and a pretend balance. Its purpose is not to find out whether you can make money; demo results are notoriously optimistic because there is no fear and, at many brokers, better fills than live. Its purpose is to make the plan mechanical.

Set the demo balance to the amount you intend to go live with, not the $100,000 default. Run the plan exactly as written, with exact sizing, for a minimum of 30 trades or six weeks, whichever is longer. Log every trade.

Graduation test:

• 30+ trades logged with entry, stop, target, size and R.
• Zero rule violations in the last 20 trades (or every violation logged and explained).
• You can compute the size for a new trade in under a minute without the calculator.
• You know the spread, session range, calendar and swap of each pair without looking.

The demo does not have to be profitable to pass. It has to show that you can execute.

Stage 2: micro lots, live

Move to a live account with the smallest size your broker allows, usually 0.01 lots (a micro lot). Fund it with money you can lose entirely without consequence. The purpose of this stage is to add real emotion and real execution (slippage, requotes, swaps, the way a $9 loss feels different from a pretend $900 one) at a cost that cannot hurt you.

Keep risk at 0.5% of the live balance. On a $1,000 account that is $5 per trade. That sounds trivially small, and it is the point: you are paying a few dollars per trade to find out whether the plan survives contact with your own psychology. If it does not, you found out for the price of lunch.

Run this stage for another 30 to 50 trades. Graduation test:

• Rule adherence as high as in demo (if it collapsed when money was real, the problem is the trader, and a larger size will not fix it).
• Average R and win rate in the same neighbourhood as demo, adjusted for live costs.
• You have seen at least one news release, one rollover and one weekend with a position open, and logged what happened.

Stage 3: scaling on evidence

Increase risk per trade or account size only when the log justifies it, and only in steps. A common rule is: after 50 trades with positive expectancy and adherence above 95%, move from 0.5% to 0.75%; after another 50, to 1%. Never above 1% per trade in the first year. The risk management course has the full scaling and monthly review process; it applies unchanged.

Key idea: Demo proves you can follow the plan; micro lots prove you can follow it with real money; the log is the only thing that earns a larger size. Skipping a stage does not save time; it moves the tuition to a stage where it is expensive.

What will go wrong

• The demo is boring, so you overtrade. Add the rule "maximum two trades per session" and count violations.
• Live, you skip setups out of fear. Log the skipped setup as a trade with a note; it counts as a violation.
• A run of five losses makes the plan feel broken. Five losses at a 45% win rate happens about 5% of the time by chance; see the drawdown material in the risk course before changing anything.
• You want to add a pair or a timeframe. Not before 50 trades on the current one.

Try it: Set up a demo account with the balance you plan to trade live. Take the plan from the previous lesson and execute it, on demo, for one full week. At the end of the week, count the trades, the rule violations and the R total. Whatever the R total, the first two numbers are the ones that decide whether you continue.

Recap

• Size every trade the same way: dollars at risk ÷ stop in pips ÷ pip value per micro lot, rounded down; zero is a valid answer.
• Demo exists to make the plan mechanical, not to prove profitability; set the demo balance to your intended live amount.
• Go live at micro lots with 0.5% risk on money you can lose, to add real emotion and execution at trivial cost.
• Scale risk in steps (0.5% → 0.75% → 1%) only on 50-trade blocks of logged evidence and high rule adherence.
• Expect boredom, fear and losing runs; the log, not the feeling, decides what changes.