Why Small Losses Are the Foundation of Long-Term Trading Success

Man on a park bench wearing a cardboard crown.
Meet "The Lord Of Small Losses".

There was a time when I thought the goal of trading was to be right.

Right about the market.
Right about timing.
Right about direction.
Right about myself.

I thought skill meant precision — calling tops, nailing bottoms, seeing patterns other people missed.

And when a trade went against me? I didn’t sell, because selling meant admitting I was wrong.

So I did what a lot of traders quietly do:

I waited.

I waited for price to come back.
I waited for “the market to realize the truth.”
I waited for my ego to be rescued.

Eventually I realized something uncomfortable:

The market doesn’t pay you for being right.
It pays you for being disciplined.

That’s when I learned to become…

The Lord of Small Losses.

Losing Well Is a Skill

After reading “How To Make Money In Stocks” by Bill O’neil I stopped treating losses as failure and started treating them as expenses.

Expenses you pay to participate.
Expenses you pay to test ideas.
Expenses you pay to learn fast.

Small losses are the cost of staying in the game long enough to benefit from the right trades when they do come.

My superpower, if you can call it that, became this:

I lose early.

Not dramatically.
Not emotionally.
Not in a blaze of chaos and regret.

Just… cleanly.

If the stock hits my stop? I sell.
If the breaks down? I sell.
If price misbehaves? I sell.

It means I’m “wrong” a lot.

But here’s the trick:

I’m wrong small AND preferably quickly.

That’s what leaves me emotionally and financially intact enough to benefit when I am right.

The Emotional Pivot

There’s a strange freedom in being willing to abandon a trade without needing to defend it.

I no longer need the market to validate my intelligence.

I don’t beg price to return.
I don’t negotiate with red candles.
I don’t hold losing positions hostage.

I just sell.

Not because I’m scared, but because my job isn’t to prove I’m right.

My job is to protect capital and wait for high-probablity trades.

That’s worth repeating…

My job is to protect capital and wait for high-probablity trades.

That shift, from ego-trading to risk-trading, is where everything changes.

Losses Aren’t Personal

Most traders think they fear losing money.

What they actually fear is being wrong.

That’s why they average down.
That’s why they hold “just a little longer.”
That’s why they build entire fictional narratives around a stock’s destiny.

Admitting defeat hurts the identity, so they avoid it.

They trade small pain now for catastrophic pain later.

I went the other way.

I became comically efficient at admitting defeat early.

No self-loathing and no regret.

Small Losses Keep You Dangerous

There’s a funny side-effect of losing well:

You stay calm.

Your account isn’t wrecked.
Your brain isn’t hijacked.
Your confidence isn’t shredded.

You’re just… ready.

Ready to take the next clean setup without baggage or revenge energy.

When a stock finally does trend, you’re not crawling out of a hole, you’re compounding.

The Philosophy, Boiled Down

My approach today is simple:

And above all:

Everything is a hold… until it isn’t.

I don’t cling to trades.
I don’t worship conviction.
I don’t need to be right.

I just need to execute.

The market will decide the rest.

In Praise of Elegant Wrongness

I no longer want to be “the guy who called it.”

I’m happy being the trader who:

Great traders aren’t fearless.

They’re honest.

Honest about uncertainty.
Honest about risk.
Honest about when they’re wrong.

If that makes me The Lord of Small Losses, I will wear my crown proudly.

It’s lighter than regret.

Want an alert when I update my watchlist and detail my latest buys? Get on my email list and I'll keep you up to date.

* indicates required

Intuit Mailchimp