What To Do When You Expect A Big Loss In Your Trades Ahead?
At times, you will find yourself striding towards a big loss.
Maybe you purchased the wrong stock. Maybe the market trends shifted that messed your entire game plan.
(After all, not all your trades will go right.)
Rushing into any decision might make things even worse.
Now, at such times, the natural instinct of any stock trader is to sell their stock and exit the market. Not that they are wrong. However, such high-stake situations usually demand you to be thoughtful in the next move you make so to minimize your loss and ease the recovery period.
So, if you expect a big loss ahead in your trade, here are 6 things you should do:
1. DO NOT PANIC
As cliche as this may sound, it’s essential that you do not panic.
In fact, acting emotionally is one of the biggest mistakes traders can make.
So, control your emotions or you will end up leaving yourself more vulnerable for even greater loss.
2. Analyze the market to be more certain
Will you really lose your money?
Remember, nothing can ever be “for sure”in the stock market. So, it’s important to know if all your fears are legit or they are just your imagination.
Meaning, it’s time to group everything you learned in share market trading course to analyze the market.
In case if you don’t know how to do technical analysis, enrolling in one of the good stock market trading courses should be one of your top priorities.
Understand the market trends, audit your trading strategy and be certain if you will really lose your money and the amount of it.
3. Will it get better?
This is another question you should ask.
Per your analysis, will things get better? Or have they turned for worse?
The answer to this will help you navigate in the right direction ahead.
Should you wait? Should you hang in there? Should you exit the market? What are your short-term goals? What are your long-term goals? Should you look for a better exit position?
“Will it get better” will help you answer these key questions.
4. Find your reasonable options
Others are rushing out of the market. But that might not necessarily be an ideal option for you.
Others have decided to wait and let the market play out. But, again, that might not be a fitting option for you.
Your goals might be different. Your appetite for losses might be different.
So, you’ve got to figure out your distinctive options yourself. What you should do next – the answer to this will be unique to you.
Take your time to find reasonable options for yourself.
5. Consult an expert
This is the final line of defense; unless you’re an expert yourself.
Find a market expert who has a good experience. Consult him/her to resolve your questions and confusions.
These people, on the back of their relevant experience, can help you make the right call.
6. Embrace the loss
Stock trading will not always be profitable. Losses are a big part of this journey.
On your way to build a high-value portfolio, you will face many losses. You cannot avoid them.
So, if a loss ahead looks inevitable, embrace it. Do not panic or act frantically. And most importantly, do not act emotionally.
Accept the loss. Re-adjust your trading plan and strategy. And then move ahead to your next trades.
These are 6 things you should do when you expect a big loss ahead in your trade.
And then, of course, it goes without saying that you should learn from such events and not commit the same blunder again.