How to Survive Your First Stock Trading Loss?
It’s going to happen. No matter if you have gone through the best stock market training and you have the best possible trading strategy, you’re still going to lose your money in the game.
And it’s not going to be easy.
In fact, if you’re not well-prepared for it mentally, such early losses may even trigger emotional trading, which can lead you to even greater losses.
So, to help you stay on the right course, here are five tips on how to survive your first stock trading loss:
Avoid making big moves
When starting, not playing with big money is always a good idea. You don’t want to put a lot of money at stake. It increases the risks of every trade, which increases the tendencies of irrational trading.
So, start small; start slow. Pick the speed with more capital over a stretched period.
With this approach, when you lose, not only does it NOT come as a big loss but it also leaves you with plenty of opportunities to learn from.
Have a long-term plan
When you have a long-term stock trading plan, you would automatically know what you need to do even after any loss.
There’s a reason, after all, why having a thorough plan is so important. It brings clarity, consistency, and rationality in your trades.
So, if you don’t already have a plan, create one. And then stick to it even after you have sustained any loss.
Sometimes over-trading is one of the biggest reasons behind loss. And this usually emerges as a big problem after the trader has already lost. They usually fall for emotional trading and start buying-selling in quick succession with hope to recover their loss. Don’t be one of them!
Do not over-trade. Think before you make any move. Have data and strategic validation before you trade. Don’t let your emotions get hold of you.
Spread your eggs in many baskets
When you have spread your eggs in many baskets, your loss wouldn’t hurt you that much. This, in turn, would ensure that you’re in full emotional control.
So, right from the go, put your money in different stocks of a diverse range of industries. Sure, for trading, this might add to your workload. But it also minimizes your risk, which is something we’re looking for here.
Have a friend who’s also a trader
Just like in any difficult situation, having a friend even here would be of great help.
Have someone who’s a trader himself and understands the market by your side. Exchanging ideas, talking about the market and reading charts together can help both make better decisions.
To that, when you’ve sustained loss, the other person can help you stay on the right course with some encouragement and wise words.
In case, if you don’t have such a friend, hiring a stock trading consultant could be of equal help.
These are five precautionary tips that will help you survive your very first loss in stock trading.
In addition, of course, the more you learn how to trade in stocks online, offline, the better will you get at handling such situations.