The Market Wizards Rule: Risk Comes First, Profits Come Second

Jasper Osita - Market Analyst

2025-12-16 15:55:06

Why Most Traders Think About Risk Too Late

Most traders think about risk after they think about profits.

They look for the setup first.

They imagine the win first.

They calculate how much they could make first.

Only after that do they ask, “Where should my stop be?”

This is the exact opposite of how Market Wizards think.

As you move deeper into The New Market Wizards, one truth becomes impossible to ignore: elite traders are not obsessed with winning - they are obsessed with survival. Profit is a consequence, not the objective.

And this single mental inversion explains why some traders last decades while others disappear within a year.

How Market Wizards Define “Survival”

When Schwager interviews top traders, they rarely speak in terms of “big wins” or “home runs.” Instead, they speak in terms of staying in the game. They know that the market does not defeat traders through one bad trade - it defeats them through cumulative exposure to unmanaged risk.

Survival, to a Market Wizard, means:

Never risking an amount that threatens emotional control
Never risking an amount that threatens future opportunity
Never risking an amount that forces desperation

This is why risk management is not a side topic for them - it’s the foundation. If you’re still treating risk as something you “tighten up later,” it’s worth grounding yourself with Trading Risk Management: The Real Edge Behind Consistency because it reframes trading as a survival game, not a prediction contest.

Market Wizards don’t ask, “How much can I make if this works?”

They ask, “What happens if I’m wrong multiple times in a row?”

Why Position Sizing Matters More Than Entries

One of the most uncomfortable lessons in The New Market Wizards is that great entries cannot save bad risk sizing.

Retail traders obsess over:

Perfect timing
Sniper entries
Minimal stop losses

Market Wizards obsess over:

How much they lose when they’re wrong
How often they can be wrong and still recover
Whether a loss changes their behavior

This is why position sizing quietly matters more than strategy selection. Two traders can take the same setup - one survives, one blows up - purely because of size. If you want to turn this from theory into something mechanical, Mastering Position Sizing: Automate or Calculate Your Risk Like a Pro shows how professionals remove emotion from the most dangerous decision in trading.

The Market Wizard mindset is simple:

“If my sizing is correct, no single trade can hurt me.”

That one belief alone eliminates panic, revenge trading, and hesitation.

Staying Power vs. Being Right

Here’s where most traders get trapped: they confuse being right with being profitable.

Schwager’s interviews repeatedly highlight traders who openly admit they are wrong often. Some have win rates that would shock beginners. Yet they remain highly profitable because their losses are controlled and their winners are allowed to do their job.

This is the difference between staying power and ego trading.

Staying power means:

You can lose 5–10 trades in a row and still function normally
You don’t increase size to “make it back”
You don’t abandon your system mid-drawdown

If you’ve ever felt pressure building after consecutive losses, you’re not alone - and it’s exactly why understanding Risk of Ruin in Trading - Respect the Math of Survival is so important. It exposes how even a good strategy becomes mathematically doomed when risk is mismanaged.

Market Wizards don’t trade to prove they’re right.

They trade to ensure they’re still standing tomorrow.

Why Small Losses Are a Psychological Weapon

Another subtle lesson from The New Market Wizards is how small, controlled losses actually protect confidence.

Large losses don’t just damage equity - they damage identity. They create hesitation, fear, and second-guessing. That’s why Market Wizards are ruthless about cutting risk early and accepting imperfection.

They understand something most traders learn too late:

Confidence is built by controlled exposure, not by avoiding losses.

If you’re struggling with emotional reactions after losses, grounding your approach in Managing Trading Losses: Why You Can Be Wrong and Still Win Big in Trading helps reframe losses as neutral data points instead of personal failures.

Losses don’t hurt Market Wizards because losses were expected.

The Illusion of “I’ll Fix Risk Later”

Many traders delay proper risk management because it feels restrictive. Small risk feels boring. Slow growth feels frustrating. But The New Market Wizards quietly dismantles this illusion.

Every trader Schwager interviews who survived long-term had one thing in common: they respected risk early, not after success.

If you’re trading funded accounts or planning to, this becomes even more critical. A structured framework like The Ultimate Risk Management Plan for Prop Firm Traders - Updated 2025 exists precisely because most traders fail challenges due to emotional risk violations, not bad strategies.

You don’t rise to the level of your strategy.

You fall to the level of your risk discipline.

Real-Life Analogy: Oxygen Before Speed

Imagine a deep-sea diver obsessed with how fast he can swim but careless about oxygen levels. He may move impressively for a short time, but eventually, speed becomes irrelevant.

Market Wizards treat risk like oxygen.

They don’t chase speed.

They ensure supply.

They plan for worst-case scenarios before chasing best-case outcomes.

That’s why they last.

What This Means for You as a Trader

If Part 1 was about self-awareness, Part 2 is about self-protection.

Before refining entries…

Before adding indicators…

Before optimizing targets…

Ask yourself:

Can I lose 10 trades and still execute calmly?
Does my position sizing protect my psychology?
Would my system survive a bad month?

If the answer is unclear, that’s not a failure - it’s a signal.

This is where consistency actually begins.

Final Thoughts

Market Wizards don’t survive because they avoid losses.

They survive because losses are never allowed to threaten their future.

Once risk is controlled, everything else becomes clearer: execution improves, emotions calm down, and confidence grows naturally. This is why profits come second - because profits only exist after survival is guaranteed.

In Part 3, we’ll tackle the next hard truth revealed in The New Market Wizards:

Losing is normal. Quitting is optional.

That’s where most traders disappear - and where elite traders separate themselves even further.

Start Trading Live!

Trade forex, indices, gold, and more
Access ACY, MT4, MT5, & Copy Trading Platforms

It’s time to go from theory to execution!

Create an Account. Start Your Live Trading Now!

Check Out My Contents:

Beginners Path

Strategies That You Can Use

Looking for step-by-step approaches you can plug straight into the charts? Start here:

Indicators / Tools for Trading

Sharpen your edge with proven tools and frameworks:

How To Trade News

News moves markets fast. Learn how to keep pace with SMC-based playbooks:

Learn How to Trade US Indices

From NASDAQ opens to DAX trends, here’s how to approach indices like a pro:

How to Start Trading Gold

Gold remains one of the most traded assets - here’s how to approach it with confidence:

How to Trade Japanese Candlesticks

Candlesticks are the building blocks of price action. Master the most powerful ones:

How to Start Day Trading

Ready to go intraday? Here’s how to build consistency step by step:

Swing Trading 101

Learn how to navigate yourself in times of turmoil

Markets swing between calm and chaos. Learn to read risk-on vs risk-off like a pro:

Want to learn how to trade like the Smart Money?

Step inside the playbook of institutional traders with SMC concepts explained:

Master the World’s Most Popular Forex Pairs

Forex pairs aren’t created equal - some are stable, some are volatile, others tied to commodities or sessions.

Metals Trading

Stop Hunting 101

If you’ve ever been stopped out right before the market reverses - this is why:

Trading Psychology

Mindset is the deciding factor between growth and blowups. Explore these essentials:

Market Drivers

Risk Management

The real edge in trading isn’t strategy - it’s how you protect your capital:

Suggested Learning Path

If you’re not sure where to start, follow this roadmap:

Start with Trading Psychology → Build the mindset first.
Move into Risk Management → Learn how to protect capital.
Explore Strategies & Tools → Candlesticks, Fibonacci, MAs, Indicators.
Apply to Assets → Gold, Indices, Forex sessions.
Advance to Smart Money Concepts (SMC) → Learn how institutions trade.
Specialize → Stop Hunts, News Trading, Turmoil Navigation.

This way, you’ll grow from foundation → application → mastery, instead of jumping around randomly.

Follow me for more daily market insights!

Jasper Osita - LinkedIn - FXStreet - YouTube

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Auteur

Jasper has been in the markets since 2019 trading currencies, indices and commodities like Gold. His approach in the market is heavily accompanied by technical analysis and of course, supported by fundamentals. He has a background in trading proprietary firms and has been teaching students how to navigate themselves in the markets from basic to advance concepts.

Try These Next

4 Powerful Tactics to Overcome the Most Costly Forex Mistakes

How to Master MT4 & MT5 - Tips and Tricks for Traders

The Importance of Fundamental Analysis in Forex Trading

Forex Leverage Explained: Mastering Forex Leverage in Trading & Controlling Margin

The Importance of Liquidity in Forex: A Beginner's Guide

Close All Metatrader Script: Maximise Your Trading Efficiency and Reduce Stress

Best Currency Pairs To Trade in 2025

Forex Trading Hours: Finding the Best Times to Trade FX

MetaTrader Expert Advisor - The Benefits of Algorithmic Trading and Forex EAs

Top 5 Candlestick Trading Formations Every Trader Must Know

Prijzen zijn slechts indicatief

Australië1300 729 171

Internationaal+61 2 9188 2999

Emailsupport@acy.com

Socceroos Legend & ACY Securities wereldwijde merkambassadeur

Uitvoeringssnelheid binnen 30 ms* - De uitvoeringssnelheid van 30 ms waarnaar op deze website wordt verwezen, is gebaseerd op de handelsserver van ACY Securities naar onze liquiditeitsverschaffers.

RISICOWAARSCHUWING: De handel in vreemde valuta en derivaten brengt aanzienlijke risico's met zich mee en is niet geschikt voor alle beleggers. U bent geen eigenaar van, of hebt geen belang in, de onderliggende activa. Voordat u besluit om in vreemde valuta en derivaten te handelen, raden we u aan uw beleggingsdoelstellingen, uw risicotolerantie en handelservaring te overwegen. ACY Capital LLC (ondernemingsnummer: 2610 LLC 2022) geeft algemeen advies waarbij geen rekening wordt gehouden met uw doelstellingen, financiële situatie of behoeften. De inhoud van deze website mag niet worden opgevat als persoonlijk advies; als u vragen hebt, kunt u advies inwinnen bij een onafhankelijk financieel of belastingadviseur. De KIS en de voorwaarden zijn beschikbaar op aanvraag of registratie. Als er advies op deze site staat, is dit alleen algemeen advies.

ACY Capital LLC ('ACY LLC') is gevestigd in St. Vincent en de Grenadines (ondernemingsnummer: 2610 LLC 2022). Geregistreerd adres: Suite 305, Griffith Corporate Centre, Beachmont, Kingstown.

ACY Securities SA Pty Ltd (Reg.: 2009/008731/07) wordt gereguleerd door de Financial Sector Conduct Authority (FSCA: 51008). Geregistreerd adres: 4 Stan Road, Sandton, Johannesburg, Gauteng, 2196. De FSCA heeft ons gemachtigd om financiële diensten te verlenen in de zin van sectie 8 van de Financial Advisory and Intermediary Services.

Voor Jordaanse klanten fungeert Al Bilad Securities and Investment Company (Registratienummer: 397, Instellingsnummer: 200027569), gevestigd in Gebouw 11, Parijsstraat, Al Swifeyeh, Amman, Jordanië (Al Bilad), als de introducerende broker voor ACY Capital Australia LLC (Bedrijfsnummer: 2610 LLC 2022). Al Bilad is gecertificeerd door de Jordaanse Commissie voor Effecten om financiële diensten aan te bieden door Jordaanse klanten aan buitenlandse brokers voor te stellen, terwijl ACY LLC de belangrijkste uitgever en aanbieder van haar producten blijft.

0,0 pips

verspreidt zich van

1:500

hefboomwerking

Onder de 30 ms*

ultrasnelle orderverwerking

Meer dan 2.200

Verhandelbare instrumenten

Gereguleerd

Het hoofdkantoor is gevestigd in Sydney