Should someone quit stock market now due to heavy loss? What should he do?
Short answer: No. You should pause investing/trading for a while adjust for your mistake and start again.
Common Myth among common people:
If you have time and some money means you can make lots of money in the stock market.
You should know that lots of knowledge and experience is required to understand even the basics of the Indian Stock Market.
Every investors and Traders aim or vision should be to
- keep learning everyday.
- read books everyday.
- learn to make decent consistent profits.
- Learn more about technical charts.
- Learn more about fundamentals; learn to read financial statements.
- Become self efficient to pick stocks.
- avoid leverage in the market until you become a professional
- understand how global and domestic events affect stock prices.
Follow some set of rules while trading , as i always say
- Diversify: Even if you are doing short term (Margin or Futures) try to pick and enter 3–4 stocks. If you are bullish on the market. Find 3 longs and 1 short. If you are bearish Find 1 long and 3 shorts.
- Stoploss: Understand technical charts first. Have a stoploss below strong support or resistance.
- Risk reward ratio: Maintain a good risk reward ratio, while entering a trade. Don’t be afraid to place orders. You can always use Candle sticks and indicators to enter and exit a stock.
- Picking right stocks: Pick high volume stocks with Big Market cap. Technical charts can be easily operated i low volume low cap stocks. If you are into short term trade with leverage (Margin or futures) always avoid high volatile stocks.
Beginners should always paper trade for 3–6 months before they venture into the stock market. Even if you are ready to lose 10k or 30k to start profiting from the market, don’t do it. You will end up losing 3 lacs to 4 lacs trying to recover early losses, before you actually sit and start learning from books, paper trade and enter into long term investment with 10k every month. Better to start learning early invest few bucks and buy few books, invest your time in reading them.
What is lost in the market is lost. If you only aim is to recover your losses by betting the market against time; it will consume your time, money and all your mental strength. Try to forget losses, learn from it. Adjust and come back.
Please share to spread awareness. Always feel free to register your comments below.
Originally written at Quora.