In Market Wizards, Ed Seykota famously said The elements of good trading are: 1. Cut losses, 2. Cut losses, and 3. Cut losses. Why is accepting a small loss so hard, and why is it the only survival skill?

🔸 Many Traders dismiss a 10 to 20% loss, thinking I can easily make it back. Math proves otherwise. Losses and Gains are asymmetrical.

  • Lose 10% 👉 Need 11% gain to break even.

  • Lose 20% 👉 Need 25% gain to break even.

  • Lose 50% 👉 Need 100% gain to break even.

  • Lose 90% 👉 Need 900% gain to break even. And nearly impossible
    👉If you let your account drop 50%, you force yourself into a game that is twice as hard as when you started.

🔸 Hope Is The Worst Strategy

  • When price hits Stop Loss, human instinct is to Remove SL and Hope for a rebound.

  • Why? Because cutting a loss admits I was wrong. Your ego hates being wrong.

  • But in Trading, a Small Loss is your best friend. It is the insurance premium protecting you from a Catastrophic Loss.

  • By not cutting early, you become an Involuntary Investor , holding junk coins for years just praying to break even.

🔸 The Rule of Thumb:

  1. When the market proves your thesis wrong, exit instantly. Do not negotiate, do not pray.

  2. Never let a single trade lose more than 2% of total equity. If it hits this, cut without thinking.

  3. Treat small losses as Tuition or Operating Expenses. You pay rent to open a shop; you pay Stop Loss to hunt for big wins.

🔹 The secret of legends is not that they are always right, but when they are wrong, they lose very little. When you are wrong, you lose everything.

Would you rather accept a sharp pain once (cut loss) and sleep well, or choose a dull, lingering pain while watching your account erode daily?

News is for reference, not investment advice. Please read carefully before making a decision.