We’ve all lost money from investments before, whether it’s in the stock market, commodities, etc. It’s impossible to never lose money. Losing money can be a very painful experience. But the important thing is to how to overcome this pain, and emerge as a better investor than before. Here’s what you should do if you’ve just realized a loss on your investments.
1. Don’t Panic
It’s not the end of the world. Do not let this loss nag you. Only by being calm can you get through this pain. Panicking will only make the situation worse. Trading on emotions is a sure way to make the loss even greater.
2. Take a Breath and Pause
Don’t jump right back in the market, hoping to make some quick money to compensate your loss. I assure you that if you do this, your loss will only magnify, and you’ll experience even greater pain and a larger loss in confidence. Slow down a bit and take a breath.
3. Have Some Fun
Don’t think about the money you lost on your investment. I know losing money is extremely painful, so that’s exactly why you need to have some fun and relax. You started trading individual stocks for a reason, so look back at that and re-discover why you’re doing it in the first place.
4. Analyze Your Loss
After you’re feeling much better, sit down and just think. Think about your loss. What mistakes did you make. Did your judgement for the market go wrong? Was your timing off? Was there some factor that you didn’t see? Think about what you can learn from this mistake, and how to avoid it in the future.
5. Only Get Back in When You’re Ready
Wait until you see a position that you’re 100% certain about. Only by being 100% certain can you build up your shattered confidence. Building up your confidence after a loss is key. Only with confidence can you have the guts to plunge in the market when you see a big potential to make big money in the markets. If you’re ready, you may want to consider if you should buy more when your investments are down, or if you’re done with the stock in general.
Readers, what tips do you have if you’ve lost money on investments?