What Should You do When the Market goes Against You?

The general public seems to love talking about the market crash, especially those who don’t even own a single penny worth of stocks. It’s perfectly normal though. Seeing the world around us burn, even enjoying it, while we are on the safe land is perfectly humane, sadly!

Market crash

And the media loves the market going down, that’s pretty obvious. All the losses, melt downs, crashes, companies being wiped out, these are the things that sells papers and increases viewership of the news.

For those who actually own the stocks however, it’s a completely different story. People invest their hard earned cash, along with their heart and soul into the market. They are not always their wisest self while making investments; still, they are the one to suffer the most.

The idea of market crash and losing one’s head is a completely different thing, the latter one being more disastrous. What most people don’t understand is that, not every downward wave of the stock market means the market is crashing. The media sure helps increase the hype and then there are the rumors. But don’t let yourself be the victim of all the bullshit in the air.

The Biggest Mistake

The biggest mistake you can make when the market’s going down is to sell EVERYTHING. That’s when you are really in loss.

Think about it, when the share market goes down, the valuation of your stock decreases. This doesn’t necessarily mean that you have suffered a loss. You still own the same amount of stocks. The downward trend might go up the very next week. Now, if you had sold your stocks the week before, then you’d be in loss.

Lesson here: Don’t panic. You only lose if you sell.

Related: Why Saving on Fixed Deposit isn’t a Good Idea?

What do you Do?

So, the big question. What exactly do you do?

My first advice is: Stay away from all the drama. Make up your mind that nothing is sinking or crashing. In fact, there hasn’t been too many significant changes at all. Market, say – your boat, is just riding through the downward part of the waves. And like the actual sea waves, the downward trend is going to end, eventually. Just like a boat riding the waves, there are ups and there are downs, but it always resurfaces onto the calm waters.

It would also be beneficial to realize that the downward correction on the stock market can be a huge opportunity for you.

Warren Buffet said:

“To be successful in the stock market, we should begreedy when others are fearful and fearful when others are greedy”.Warren Buffett

If the analyst you follow hints that a certain stock is going up, you better grab as many units as you can. The costs will be lower, leading to a higher profit in future.

Rather than listening to your neighbors’ opinion about the rise and fall of the stock market, you’d be better off if you actually read the financial reports.

It’s not always advised to hold on or sell your shares. It’s often like gambling in the stock market business. Another misconception is that the stock market rises or falls overnight. Although true till some degree, it’s not always the case. There is always some degree of behind-the-scenes build up.

The only thing you can do is; either to analyze the market on your own, or follow the blogs, posts and tweets of someone who knows his craft.

Don’t Miss: How To Keep Away Emotions While Trading and Investing?

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I have been actively trading stocks and currencies since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund which has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.

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