|However, it's unlikely that anyone will lose all their capital in 1 or 2 trades but you only need to lose 50% to get into serious trouble. Lose 50% and you've got to make 100% just to get back to even. And as simple as that equation is, many people don't realise it until it happens.
Trading and speculation is therefore more about risk control than generating profits. It's not about how much profit you make, rather how much risk was taken to earn that profit. Risk £1 to make £5 is far better than risking £10 to make £15.
Sadly many people think that successful trading is all about the profit, which is why they'll happily risk large amounts of their capital. They then wonder where it all went wrong.
My advice is simple, always use stop losses and risk no more than 5%, preferably 1%-3%, of your total account on any one trade. Risk more and it's probably odds on that you'll lose money over time because of the leverage. So it might take just 1 or 2 trades to lose 20%, 30% or maybe even 50% of your account.