First thing first.
Profit and Loss in Share Market is the common thing. Because one who gets profit another suffers loss. Tragically there are only 5% are successful in Share Market and rest 95% people lose it.
The reason behind this is that successful 5% who earn, they are the professionals in Share Market. And rest 95% are on the way to become professional.
But many of them don’t learn the common business sense and end up losing everything and goes into deep negativity and could not accomplish their journey.
If you are having loss in Share Market then always think that you are in the row to become a Market Professional who has good business sense. And have good knowledge about required skills of Share Market.
In this article you are going to learn the reasons why many of you get the big loss in Share Market and the perfect solution to that which make you skilled over the time.
When you make big loss in Share Market…
Before we enter into the market by taking our hard-earned savings by sacrificing our current wants, we carry different dreams.
Someone who find living by simply trading in the stock market or dream of buying an expensive car. Someone who finds long term safety or someone thinks about profiting in a year.
But when you see negative figure in front of your screen you feel very bad, you will start cursing either yourself for your mistakes or to the market for unexpected movement and to others who gave you wrong advises.
Below are the list which happen to you when you make big loss in Share Market.
Reduce in Capital
When you don’t have any good capital in hand you can’t enter into another stock or business. Because money are the core part of the business.
Without money business can’t be done. Because everyone is to earn money and capital is required to earn the same.
Profit always makes us happy and feel good. But adversely when you make losses you feel so pity on you. You will not have any mood of doing your general work happily and with concentration.
Loss make us unstable by mentally. We feel depressed and skeptic towards our-self and our abilities.
We our self think that, Stock Market is the biggest scam in the world. And we start losing our hopes on investment on shares at all.
Top Reasons of Loss in Share Market
If you are a begineer you think that X Ltd. is rising and it is on the top level. If you sell from that level you will get a huge profit when it fell down.
And similar situation while buying a stock from lowest price.
But you will become wrong and end up losing money.
If you change the strategy that buying at top and selling at bottom will still become wrong as it reverses strongly.
You don’t know how to deal with such kind of situation.
You start feeling that someone is trying to beguile or cheat you.
You will start losing faith over the market.
Often it happens to us that when we enter into the stock it start giving losses. We feel so angry about the market.
But let me tell you honestly that, you are not the single person on earth experiencing the same situation. Everyone experiences the same.
No matter wherever market goes. Market is always right. You become wrong.
Basically Stock Market is not meant for Gambling but people do. People trade only because they feel that it will give him profit. They do not have any strong purpose or reason to trade.
It is made purely for the purpose of investment, hedge and trade.
Trading in High Leverage
Leverage is a tool which is used to trade with the higher volume than your own capital.
It has disadvantages as it have benefits. When you take leverage you can earn much but you can lose as such.
Trading on other’s tips without self Analysis
When you trade in the market by putting your money then you should know where you are trading.
Many people fail simply because they don’t know how to analyze any company or its charts.
So, it is advisable to trade by analyzing the company by own.
Trading on tips will not give you a success. There are very few companies which are honestly doing their advisory job.
I may say less than 1% advisory companies are properly doing their business. Rest are just stand there to pull money from your pocket.
You must be aware of those companies and also start analyzing yourself.
The Best ways to recover
Mental stability is the key to success. Though you are at the most bottom stage of your life you must be fully stable mentally. Because it is the one which help you to sort our every problem in your life.
When you have a huge loss in share market. Stay calm, meditate for 5 minutes every day.
Think again, what mistakes you made and promise yourself that you are not going to do that mistakes.
Learn/Revise Market Skills
There are various skills are developed over the time since market established.
Earlier, only fundamental analysis used to analyze any company.
Later on, many people contributed towards analyzing market with various analysis methods. All those analyses are as below.
- Fundamental Analysis
- Qualitative Analysis
- Technical Analysis
For Stock Market Trader/Investor like us, only two analysis methods are possible which are Technical as well as Fundamental analysis. Because Qualitative Analysis includes deep analysis of the organization, their hierarchy, working pattern, hiring methodology, knowledge and experience of top level executives, etc. by way of investigating company inside our and by interviews methods.
Normally Qualitative Analysis is used by AMCs (Asset Management Companies) like Mutual Funds, etc.
So, we can take help of AMCs Investment Portfolio to quickly decide whether the the company is good in Quality or not.
Now we should focus what we can do. Ignoring the Qualitative Analysis part we still have two methods in our hand.
After focusing on these two we can really understand the company’s financial status and price movement. You just need to do one thing. Read at least one book every month on the Business.
Recommended books are given in the bottom of the article. Do check it out.
Be updated with News
We can’t decide whether to trade or not if you are unaware about what’s going in the market. So, reading newspaper is the vital part to sense the market movement and direction.
Read every day. At least one page. But you should read
Forget what worse things happened with your trading account. Now start with fresh.
Focus on what you have right now.
This time you have to take steps wisely.
1. Capital Management
If the capital is rising then you are in profit and if it is depreciating then you are in loss. Capital is the only parameter with which you can tell what is your financial status.
So, protecting capital is the first target you should understand while knowing money management.
It may be like this,
- How much capital you are going to keep as safe funds (Reserved) just to conquer any financial calamity?
- For term investment plan, How much different amounts to keep invested for the Long (about 5 to 10 years), Medium term plan (about 3 to 12 months)?
- How much funds to have in cash for trading or to Hedge and protect our investment from possible worse news?
You must know these capital management parts in % form.
Here is the recommended capital management for 1 lac with (% format).
- Reserves – 20,000 (20%)
- Long Term – 40,000 (40%)
- Medium Term – 30,000 (30%)
- Cash Funds – 10,000 (10%)
2. Portfolio Management
After capital management, second step arrives that is Portfolio Management.
Financial Portfolio Means the combination of Different Investment Tools ranging from Low to High Risk and Reward.
Portfolio is build by your risk appetite. Following things get considered while determining risk of a person.
- Age expectancy
- Investment Goals and Required Time
- Dependent members in family
- Personality type (Like risk taker or risk avers)
- And many more things
Once the portfolio is built successfully money gets invested and it takes timely review on each companies by its performance.
Timely Review on Companies and industry is made due to enhancing its profitability and performance by Re-balancing Financial Portfolio.
3. Trade Management & Position Sizing
Now, the third step comes in that is trade management and Position Sizing.
This trade management is helpful to all those who trade for Short Term or just do Intra-Day trading.
In this step one has to decide following decisions
- Number of Trades – How much to trade?
- Capital Utilization – How much capital to use for putting those trades?
- Maximum Loss – How much should be the maximum loss in each trade?
- Success Ratio – How much success ratio one strategy possess?
Choosing The Best Broker
Many good books have written that full service brokers are better than Discounted Brokers.
By reading this sentence many people tend to open an account with the Full Service Broker but soon or later experience that this sentence was completely wrong.
Because, They somewhere thought that full service broker will help him completely to earn from the stock market.
After some time they just calculate that how much they made loss and how much his broker made profits.
And later on he understands that only broker made the profits.
Full Service Broker’s serve and guide the Trader is the myth.
So, opening a low or no cost broker is the wise decision. Because he never disturbs you in your person time by always advising you trade.
Hence, choosing a discounted broker will be the wise decision.
In India there are many Discounted Brokers are working well but we have to choose many of the factors before choosing them.
- High Intuitive Trading Platform
- No Brokerage for Equity Shares Delivery Trades
- The Lowest brokerage for Equity Intraday that is minimum of 0.01% or Rs. 20
- Flat Rs. 20 for Futures and Options (Better than Full Service Broker)
- Never disturbs by calling and recommending shares
- Mutual Fund SIP or Lump sum investment Facility Available
- Trading Segments are as below
- NSE Equity
- NSE Derivatives
- NSE Currency
- BSE Equity
- BSE Derivatives
- MCX Commodities
- Other Features are as below
- Algo Trading Facility Available
- Fox Trader Platform Available (Paid)
- NEST and dedicated Trading Platform Upstox Pro available
Open New Upstox Account Here
Click on the below link and just simply fill the application form and get your new trading account opened just within an hour by all online process.
Believe yourself, this is your first step to become independent while taking wise decision.
Once you open your account through this link, contact us within 3 days of account opening and tell us your client ID.
We will verify that whether you opened your account through this button. Once verification completes you will get complete help to structure your own trading and investment strategies.
All the experiences get shared with you to improve your decisions.
Wish you all the best for your Trading and Investment Future.