That said, it's rarely talked about unless times are tough. Maybe that's why you're here today. So lets start the discussion!
Capital is used to purchase assets. Your capital represents your purchasing power; your ability to buy. From a personal finance perspective, think of it as your cash; both in profit form (net income in your income statement) and asset form (savings, checking, and investing accounts in your balance sheet). It's the hard earned money you have after paying all your bills.
Preservation is the act of protecting something from loss.
So capital preservation is the act of protecting your net income and your assets, and thereby your purchasing power. In other words, it's a practice; one that ensures no single event, position, trade, or expense, no matter how big, can impact your ability to create a profit and/or use that profit to buy things.
Strategically, investing one of the only ways that the 99% have a chance at "retirement" in the traditional sense. It's a drawn out process, and we make small, seemingly insignificant contributions over a long span of time. And human beings are terrible at this type of planning.
So if you're going to win the long game, you've got to pace yourself. That's essentially what capital preservation allows you to do:
In the world of personal finance, we're faced with many other types of losses...most of which offer ZERO chance of reward. These losses can come in the form of day to day expenses, commissions, fees, taxes, interest payments, inflation, deflation, bid/ask spreads, getting fired, accidents; the list goes on and on.
So you should ALWAYS practice capital preservation; use it in all your accounts, investing or otherwise.
On the income and expense side, fon't pay ATM fees or monthly maintenance fees on checking accounts. Don't keep balances on high interest rate credit cards, or get high interest rate loans for things that depreciate like cars.
As you start to build your assets, watch the minimums. Banks, and even some brokers, will charge you with maintenance fees if you don't maintain a minimum balance. At one time, I had an account that would charge $25 per month if my AVERAGE balance fell below a certain threshold! That could be up to $300 per year! Needless to say, I preserved my capital by moving it elsewhere.
As you succeed, the minimums fade from view, and you'll need to start watching the maximums. The FDIC and SIPC offer some protection for your accounts, but those protections have limits and conditions. Use portfolio sizing to address this risk.
When you're buying an investment, make sure that no single position can destroy your account. Use position sizing to address this risk. And make sure that the loss on any trade never exceeds 7%.