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How to deal with losses on the stock market


icoulee.com: There is no other way: at a certain point, you will experience a loss if you trade stocks. Sometimes, the loss is clearly visible, namely the stock price plummeted. In other cases, your losses are not apparent because they are very small in number.losses come in various forms, three of which we will discuss here.

Each of these types of loss is painful, but you can reduce this pain with the right mindset and the willingness to keep learning.

Capital Losses

In its simplest and perhaps most painful form, that is when you buy a stock then the price goes down.at some point, you decide to sell it. This type of loss is called capital loss because your capital value has clearly been eroded and reduced. This capital loss can be short term (trading) or long term (investment).

Loss of Opportunity and Time

Another type of loss that is not so painful but happens quite often.You may have bought a number of shares and one year later, after several ups and downs, it turns out that the value is not much different from what you paid for.

You might be tempted to say to yourself, "Well, at least I haven't suffered anything." But it is not true.You have invested your money for a year and you have not received any reward. If you put that amount on deposit, you will get a little interest during the year.

When the investment return of a stock is not moving anywhere or even is not equivalent to the return of low-risk bonds, then it's the same as you experience losses.you lose the opportunity to invest your money in an instrument that will give you a positive return that exceeds inflation every year - and that is really a loss.

Unrealized Profit Loss

This type of loss occurs when your stock makes a significant increase and then falls back, something that usually happens with volatile stocks or fried shares, and you haven't had time to sell it and realize the profit.

Not many people have succeeded in buying shares at the lowest price and selling it at the highest price. Many investors sit quietly and hope that the stock will recover and return to the highest price, but that may never happen.even if that happens, too many investors who return to survive do not realize the benefits in the hope that they will get even greater profits.

The best medicine to overcome this type of loss is to be happy with sufficient benefits.don't be too greedy to expect unreasonable profits; You will risk the possibility of prices turning down and turning profit into loss.

Floating Loss

You can tell yourself that your loss is "just a loss on paper," or, "If I don't sell it, then I don't lose anything." The reality is that if you make a mistake or something unexpected happens, then you still have to decide what to do.

If you believe the company's long-term prospects are still good, and you are a value investor, maybe when prices go down it is the right time to increase your share ownership.

On the other hand, your floating loss will also eliminate the opportunity if the price does not move up and you choose to stay in the floating loss position.if you do this, then you lose the opportunity to invest your money in other stocks that have the potential to generate profits for you.

How to Deal With Your Losses

No one wants to suffer any kind of loss. However, don't let your ego get in the way of making the right decision when it happens.the best course of action is to cut your losses and move on to the next trade. Take a deep breath and move forward:

ANALYSIS OF YOUR CHOICE

 
Review the decision you made with a new perspective after some time has passed.can you do something different? Will you lose less or maybe not at all if you act differently? Try learning from experience.

ACHIEVE WHAT HAS BEEN LOST

 
Tighten your financial belt for a while if you have to and if the loss is small enough, you can recover it with a little discipline. Get back the money.then try again, remember the things you learn for the next time.

DON'T LET THE LOSS OF STOPING YOUR STEPS

 
Remind yourself that there are many traders out there who experience losses as you experience - even greater. Losses don't stop you, but they can make you a better trader if you handle them properly.

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