The Power of Not Losing—Capital Preservation in Trading

Why Protecting Your Capital is the Key to Long-Term Success

Title: The Power of Not Losing—Capital Preservation in Trading
Subtitle: Why Protecting Your Capital is the Key to Long-Term Success

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Hey Trade Warriors,

Today, we’re diving into one of the most critical aspects of long-term trading success: Capital Preservation.

If you’re seeing this for the first time, here’s where we’re at in the series:

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Table of Contents:

1. Power of Small Wins

2. The Power of Not Losing 👈 You are here

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Introduction

While making big gains is important, minimizing losses is even more crucial. Studies show that avoiding major losses significantly improves your chances of profitability.

For instance, avoiding the six worst years in the S&P 500 from 1926 to 2014 would have increased annualized returns from 10.12% to 13.01%, leading to a compounded final portfolio 10x larger¹.

Let’s talk about why not losing is often the same as winning.

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Why Capital Preservation Matters

Every dollar you don’t lose is one you can reinvest in future opportunities. As the Richest Man in Babylon teaches²:

"Guard thy treasure from loss—before thou entrust it as an investment in any field, acquaint thyself with the dangers which may beset it."

This ancient wisdom applies directly to trading. Before committing capital, understand the risks. Growth stems from discipline—sometimes the best win is simply not losing.

Each time we minimize risk and stick to our system, we're already ahead.