Why Small Losses Are Part of Smart Investing — And How to Keep Them Small
How professional investors manage risk and why trying to avoid every loss is a losing strategy.
"In investing, losses are inevitable. The key is making sure they’re small, controlled, and never wipe you out."
Losses Are a Normal Part of Investing
It’s easy to assume that good investors never lose. But the truth is:
Every great investor has losing trades or bad investing decisions
Trying to avoid any loss leads to bad behavior — like holding losers too long, or refusing to admit mistakes
The real risk isn’t small losses — it’s large, portfolio-crushing losses
In fact, small losses are often the cost of positioning for bigger investing gains.
Why Trying to Avoid All Investing Losses Backfires
When you fear every loss, you end up:
Selling too early
Over-trading
Avoiding necessary risks
Missing big, compounding investing opportunities
The goal is not perfection — it’s discipline.
Your job as an investor isn’t to be right 100% of the time. It’s to:
Cut your losses early when you’re wrong
Let your winners run when you’re right
Keep your investing losses smaller than your investing gains
How to Keep Investing Losses Small and Manageable
? Analogy: Investing is like professional sports. Even the best teams lose games — but they win the season by managing losses and maximizing wins.
The Math of Losses — And Why It Matters
A small loss is easy to recover from. A big one isn’t.
That’s why professional investors cut losses early. It’s not about ego — it’s about math.
Common Investing Mistakes to Avoid
Refusing to sell a losing position — hoping it will bounce back
Adding to losers without a clear plan — also known as "averaging down"
Believing that one bad investment will come back because it ‘has to’
Ignoring risk/reward calculations — focusing only on potential profits
In smart investing, losses are a line item — not a disaster.
Quote to Remember
"The most important rule of investing: Don’t blow up. Keep your losses small so you can stay in the game."
Read Next:
How to Size Your Investing Positions Like a Pro
The Danger of Over-Diversifying
Brand Transition Note ForexLive is becoming InvestingLive.com — giving you practical, time-tested investing principles to help you grow and protect your wealth.
Looking for Timely Stock Trade Ideas? Tired of missing great investing trades or getting lost in noisy groups?
InvestingLive Stocks delivers free, focused investing trade ideas right when you need them:
S&P 500 & Nasdaq 100 stocks in focus — including large caps & momentum setups
Unique investing opportunities you won’t find anywhere else
Fast, actionable, noise-free alerts
Smart entries + smart exits (buyTheDip setups included)
Join free on Telegram: t.me/investingLiveStocks
This article was written by Itai Levitan at www.forexlive.com. Read More Details
Finally We wish PressBee provided you with enough information of ( Learn to Invest: Knowing How to Lose! )
Also on site :
- Terrorist plot foiled in Russia’s Kaliningrad – FSB
- Old Navy Is Selling a 'Very Comfortable' Mini Dress for Just $17, and Shoppers Say It’s 'Perfect' for Summer
- Your Next 3 Years: What Happens When Saturn Enters Aries