There is only one way to trade without fear, and that is to know, before you execute the trade, what your worst case loss can be if you are wrong.

You must be able to walk away from a trade knowing that your <a href="http://tradinghubonline.com/blog/?page_id=571">StopLoss </a>is in place and will stop you out of the trade when you reach your previously calculated StopLoss level. This emphasise the importance of a well prepared Trading Plan, Proper execution, and a well defined Profit Taking and <a href="http://tradinghubonline.com/blog/?page_id=571">StopLoss </a>Risk management strategy (Exit Strategy).

There are some factors that can make it difficult to keep a precise StopLoss
<ul>
	<li>Liquidity can be a problem when you try to exit, if a market get scared buyers and/or sellers might disappear.</li>
	<li>Important and unexpected marked news can create volatility that can make it difficult to exit.</li>
	<li>After an overnight market close the next session might gap open below or above you StopLoss because of overnight changes in the market.</li>
</ul>
There are only five possible outcomes for a speculation trade:
<ol>
	<li>Break even</li>
	<li>
<h3><span style="color: #00ff00;">Small Profit</span></h3>
</li>
	<li>
<h3><span style="color: #ff9900;">Small Loss </span></h3>
</li>
	<li>
<h2><span style="color: #00ff00;">BIG PROFIT </span></h2>
</li>
	<li>
<h2><span style="color: #ff0000;">BIG LOSS</span></h2>
</li>
</ol>
<span style="text-decoration: underline; color: #993300;">You should from the beginning be absolutely focused on not taking big losses</span>

One large catastrophic loss can deplete your capital. It is emotionally very difficult to come back and make money again.

After a losing trade you need a better winner just to even out again and get your capital back.

In the table below you can get an idea of the kind of winning trade you will have to do to cancel out a losing trade. If you allow a huge loss you will need more than a miracle to get back to your original capital before the loss.

If start with $100,000 capital and you loose 2% on a trade you need to make 2,04% on a winner to get back to $100,000.

If you allow your trade to run away from you and you lose 20%, you need to recapture 25% on the $80,000 capital that you have left after the loss.

<a href="http://tradinghubonline.com/blog/wp-content/uploads/2015/09/Possible-losses-to-recapture-calculations.png"><img class="alignnone size-full wp-image-823" src="http://tradinghubonline.com/blog/wp-content/uploads/2015/09/Possible-losses-to-recapture-calculations.png" alt="Possible losses to recapture calculations" width="498" height="268" /></a>