“The first loss is (always) the smallest” is an old bit of Wall Street investment wisdom. A novice trader, at first, invests little and often has a stop loss. The first loss is usually small.
 
The Wall Street proverb dates at least to the 1960s and is often spoken when losses occur.
     
   
HubPages
The Magic of Money Management
(...)
Always Trade With a Stop Loss
We have heard it said, “The first loss is the smallest.” This means that when you are stopped out at your stop loss this will be the smallest loss as compared to letting it run and thinking the trade will come back. Then when the trade becomes more than you can deal with you close the trade for a huge loss and are happy to have anything left in your account.
 
Losing is a part of trading. Controlling those losses is good money management. A stop loss is as important as a good entry or exit signal. We suggest starting out with a small number of lots, placing your stop loss, then adding on to the trade when it goes in a positive direction. If the stop loss is hit you have only risked a small portion of your account. It is ok to lose if you are in control of the losses.
 
Google Books
Mortgage Lending:
Fundamentals and Practices
By Willis Rooks Bryant
Published by McGraw-Hill
1962
Pg. 366:
Many lenders feel that the first loss is the smallest loss and dispose of such properties as quickly as possible.
   
Google Books
Legal Problems of Business in a Free Society
By Harry A. Dower and Charles F. Vihon
By Harry A. Dower, Charles F. Vihon
Published by West Pub. Co.
1973
Pg. 676:
Many businessmen adhere to the concept that “the first loss is the smallest loss.” While this aphorism is not very precise, what is generally meant is that when a business in financial difficulty proposes to settle with all its creditors at something less than the full amount due, the acceptance of this offer by the creditor will result in…
   
Google Books
Corporatism and Change:
Austria, Switzerland, and the Politics of Industry
By Peter J. Katzenstein
Ithaca, NY: Cornell University Press
1987
Pg. 231:
The early 1980s thus gave credence to the old stock market adage that “the first loss is always the smallest.”
 
Google News Archive
28 June 1987, The Courier (Prescott, AZ), “Investors who got in stocks early very satisfied now” by Roxie Webb, pg. 1D, cols. 4-5:
A true trading philosophy for this man should have included another market cliche which states “The first loss is the smallest one.” That bit of wisdom is followed by all professional traders, and many specialists and floor traders close out losing positions just as fast as winners.
 
Google Books
Cross-border Exposures and Country Risk: Assessment and Monitoring
By Thomas E. Krayenbuehl
Published by Woodhead Publishing
Rev. ed. of: Country risk. 2nd ed. 1988.
2001
Pg. 113:
The securities investor will certainly sell assets, remembering the maxim that the first loss is always the smallest.
 
Google Answers
Clarification of Question by cash58-ga on 23 Nov 2002 11:09 PST
We make e-commerce software.  You can see from the information already given that we reversed the the rule of thumb “the first loss is the smallest loss” by a long shot.
 
Daniels Trading
November 14, 2005
Why Do Traders Lose?
by Jeff Coglianese, Senior Broker & CTA
(...)
The futures industry is full of trading adages that for the most part are sage advice. The following are some of the most common adages in the business:
 
“Let your profits run and cut your losses short”
“The first loss is always the smallest”
“Plan your trade and trade your plan”
“Pigs get fat, hogs get slaughtered”
“The trend is your friend”
     
Google Books
A Beginner’s Guide to Day Trading Online
By Toni Turner
Published by Adams Media
2007
Pg. 53:
If faith and hope encouraged you to hold onto a losing position, bite the bullet and get out of the trade immediately. The first loss is always the smallest.
 
Forex Strategy Secrets
January 4, 2008
The Secret of Building a Highly Profitable Trading Account
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Trade with a stop loss
Trading with a stop loss is one of the most important parts of the trade. It falls under the category of money management. This is more important than the entry and exit points of a trade. The first loss is always the smallest and that is usually at the stop loss.
     
LewRockwell.com
The Fed’s Failure
by Michael S. Rozeff
September 17, 2008
(...)
The first loss is the smallest, the saying goes.