Important Lessons When Investing: The Law of Large Losses

When you are in profit, do not forget a golden rule in trading: The law of large losses. This means: The more you lose, the harder it is to recover. Imagine: Lose 33%, you need to increase by 50% to break even. Lose 50%, you need to increase by 100% to recover. Lose 60%, you need to increase by 150% just to return to the starting point. This means that if you lose too much, you may need 3 times the amount of money lost just to return to the original state. This is precisely why many investors lose all their profits simply because they do not know when to take profits. Simple Yet Highly Effective Rules To protect profits and reduce risks, you should follow the rule: Take partial profits → Withdraw your initial capital. Let the remaining amount continue to grow → Allow the "big win" money to operate on its own. This method helps you: Preserve capital, reduce psychological pressure when the market adjusts. Still keep the opportunity for profit from the remaining part, not to miss the growth trend. Practical Experience I once had trades with a 100% profit, but then the market reversed, and I lost 80% of the profit. Result: unable to recover. This emphasizes an important truth: The most important job of a trader is not to make the most profit, but to preserve capital in order to continue playing. Loss of capital = Game over. If you want, I can write an additional version of this article with illustrative examples using a capital increase and decrease chart to help readers visualize better. Do you want me to do that?