How to manage loss in the stock market is an art and not many traders or investors can deal with the trading losses. The biggest question is what to do after incurring a loss in the share market. It’s trading psychology that loss has more impact compared to the profit even though the loss is small. If you trade under the impact of loss then the probability of future trades will be loss-making is very high. It will trigger a chain of trading or investment losses.
In this video, i have shared 7 important points and these points will explain to you How to Manage Loss in the Stock Market?
1. You should avoid revenge trading. Normally the trading rules are not followed in such cases and the trader or investor is in a hurry to recover the loss.
2. If you are feeling sad about your share market loss then it means you have not followed the risk management. You should always risk the amount that you can afford to lose.
3. You cannot maintain 100% accuracy in the stock market. A success ratio of 80% is very good. Therefore, you should be mentally prepared to take a loss in 2 trades out of 10.
4. You should introspect what went wrong in the loss-making trade.
5. You should re-check the backtesting system or setup.
6. You should also check whether you followed all the rules or not. Also, verify your trading or investment checklist.
7. Lastly, you should forget about your losses and move on.
However, if you incurred losses in 2-3 consecutive trades then you should stop trading