Most Forex brokers claim that (unlike Commodity brokers) your risk is limited only to the funds in your account. This means that if your account were to be blown away by some unfortunate event that your risk is only limited to the funds that you have deposited with them. They are actually lying to you because in the fine print of their contracts it says that they can chase you down, at their discretion, for any negative balances, however that being said they normally won't do this to you (unless you seriously aggravate them by doing something unusual).
Ok, so you can use this "limited risk" to your advantage. Lets say, for a simple example, that you can have $10,000 on deposit in your Forex account. We know that the maximum risk is 2% on any given trade, which translates to a maximum of $200 you can risk on any given trade. On one end of the spectrum (least leveraged) this means that you can trade one mini lot with a 200 pip stop, and at the other end of the spectrum (most leveraged) you can trade two full lots with a 10 pip stop (if you were scalping).
Looking at the most highly leveraged side, you would need a minimum of $1,000 on reserve with some brokers (200:1 leverage is $500 per lot), or $2,000 on reserve with some other brokers (100:1 leverage is $1,000 per lot). Lets assume for our discussion that you are using a broker that allows you 200:1 leverage.
So if you were to be engaging into the highest leveraged types of trades (scalping with 10 pip stops trading 2 regular lots) then all you would need in your account to be able to trade is $1,000 to cover your margin requirement and a few extra bucks to give your trades some room to breath, say an extra $1,000 (which would allow you 5 consecutive losses). Thus all you really need is about $2,000 in your account to trade in that manner.
What do you do with the other $8,000? Simply keep it in a bank account (open a dedicated account, don't mingle the funds in your personal spending account). Now the important thing to keep in mind is that mentally you imagine that you have a full $10,000 in your trading account to work with. The fact that those funds are NOT in your trading account means that they are protected from potential loss (so don't go spending that money, treat it as if it were in fact on deposit with your Forex broker).
Thus when trading like this it appears that you are risking 10% of your account, but in reality you are still only risking 2% maximum. Should you loose most of the money in your trading account then simply wire in another $1,000 to let you continue trading (but if you do this several times then think about what you are doing wrong). Not only will doing this save you from unfortunate events from wiping out your balance it'll also prevent you from a day of stupidity (irrational trading) from seriously deleting a significant portion of your account. Conversely, when you score profits then withdraw an appropriate amount from your broker and deposit the funds into your bank account.
Just remember that when calculating how much you may risk on any trade (maximum of 2%) to factor in the sum total of your brokerage and your bank accounts.
Source : Forex Sailing
