Stock market traders face loses for various reasons. Sometimes, they become frustrated and find they no longer have a love for trading anymore. But, it’s best not to lose hope. It is a common fact, traders will at times face a losing streak, but, focusing on increasing the winning streak not focusing on the losing streak is what is needed. Overcoming the overwhelming feeling when trades don’t go as well as expected, is the first step to handling the highs and lows of trading. It can be a long path before you see returns on investments. A hardy shell definitely helps.
In this post, we’ll discuss the ways you can deal with losses. So, if you aspire to be a stock market trader, you should read the article carefully to help you overcome the inevitable loses.
Modify the plan
Traders should modify their plan, which might help them to cope up with the highs and lows. Due to not applying the appropriate plan at the right time and in the right way, traders face many issues. Before adopting the well thought out plan, traders need to analyse the history of the company and the current situation. As a result, they have more information to enable them to make an educated choice, not just a luck guess. Although sticking to the same plan every time will not work either, as each company and situation will be different, even if it’s only by a small amount. If you can apply the right plan in the right situation, you have more chance that you will not face a loss.
Develop risk management skills
Without managing risks appropriately, you can’t limit your losses. That’s why you should try to keep practicing, as the more experience you have, the more comfortable you will be with your decision making. and risk management skills. A person with strong risk management skills may not always increase their funds, but they know they can make it up next time and not allow it to defeat them.
Remember, to reduce the level of risk, it’s important to identify the optimum risk factor. This way when ETF trading it’s more in your favour. But remember, you should not risk more than 3% of your account balance, even if you feel comfortable taking the risk of losing a big sum of money from a well thought out trade.
You need to produce a list of rules, which could help you control the level of risk you are willing to accept. Being a newcomer, you should not take high risks. If you do, you’re more likely to make the wrong choice. So, remember to only accept the level of risk that you can afford.
To do well, you need to become more flexible. As a result, you will find you can adapt easier to each situation. However, some traders become fearful and can’t cope as well, when faced with new situations. Panicking can then lead to poor decision making. For this reason, you need to be as comfortable and as well read as possible. And remember the saying ‘practice makes perfect’. Professionals have spent years learning how to deal with different scenarios and how to think quickly when plans need to be changed last minute.
Use a stop-loss
A stop-loss order will help you limit your loss. By placing an order with a broker to buy stock at a specific price and sell when it falls or rises to a certain price, gives you more control when new to trading, as you’re guaranteed not to miss the important moments.