'Being Right Means Nothing If You Go…': Zerodha’s Nithin Kamath Reveals The Risk Mistake That Destroys Most Retail Traders

Is there a guarantee that all your stock market bets would turn profitable if got hold of tomorrow's news today? Founder and CEO at Zerodha, Nithin Kamath, shares insights that answers this exact query. Let's find out.

Surprisingly, most traders failed to yield positive results even after having access to The Wall Street Journal's upcoming headlines even before everyone.

As part of this intriguing experiment conducted by Elm Wealth, 118 finance students were given tomorrow’s WSJ front page 24 hours before the news broke. While one would hope for easy profits, half lost money and 16% went completely bust.

You'd expect wrong prediction to be the key issue. However, the students called market direction correctly 51.5% of the time, which is better than random chance.

So, what went wrong?

As per Nithin Kamath, most students went wrong with position sizing, which determines how much capital should be allocated to a particular trade.

"Many students bet huge portions of their portfolio on a single trade. Some used 20x, even 60x leverage. When they were right, they made money. But when they were wrong, they blew up. All it took was a single misstep," Nithin Kamath conveyed via an X post on July 21, 2025.

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How Did Experienced Traders Perform With The WSJ Headlines?

The same study was also conducted on a group of experienced traders, and the results were entirely different. With the same advanced knowledge, they delivered average returns of +130%. Wondering what gave them a competitive edge? It's superior risk management.

They knew how much to risk. They bet small when uncertain, and big only when the odds were clearly in their favour. That’s the art of position sizing," Kamath said.

Takeaway for retail investors

So, the experiment underscores a big takeaway for retail traders and investors: Risk management is more important than being right when it comes to trading.

"Here’s the core lesson: Even if you could predict the future, it wouldn’t save you from poor risk management. Trading isn’t just about being right. It’s about surviving long enough to stay in the game. Most retail traders obsess over predictions. But smart money obsesses over how much to bet when they think they’re right—and how to protect themselves when they’re wrong," Nithin Kamath said.

Ultimately, he added that in the markets, being right means nothing if you go bust before you're proven right.