Everybody wants to earn money from the stock market, yet investors lose money. Why?

You can grow your wealth in the Stock market if you invest carefully. But, there are also many ways to lose your hard-earned money by investing in Stock market. No investor buys securities or stocks that are expected to see a downfall in prices in the future. The possibility of loss in the stock market is always present although the investment objective for everyone is profits.

Most investors think about stock market as a place for short-term gain. They think that the stock market is like a money making machine which can turn them into millionaires over a period of time.

A lot of investors have made profits through stock trading. But it was possible because they’ve made some really smart choices by adopting carefully thought of strategies and good market knowledge.These investors are also disciplined in their approach. That’s why they’ve reaped the benefits of stock trading.

A long-term approach is an excellent way to grow wealth from investing in stocks, short-term goals can lead to substantial losses. Long term Investments in the Stock market  allows investors to tide over market volatility and generate a substantial profit. Investments in Share market requires careful planning and an ability to stay focused on your goal. So, investors shouldn’t expect overnight profit.

Investors should take these precautions while investing in the Stock Market:

1. Gain Some Knowledge Of The Market

Investors should gain some understanding regarding the market and economy before investing. Most investors start investing into the stock market without understanding its technicalities. It leads to wrong investment decisions.

2. Avoid Frequent Buying And Selling

Investors lose money because they lack patience while investing in the stock market. They follow day trading strategies instead of looking at long term gain. Investors  practice frequent buying and selling for short-term gain. People should follow a proven investing method and select stocks based on strong fundamental analysis.

3. Stock Picking Based On Strong Fundamentals

Investors take investment decisions based on the past performance of a stock. It is not the best approach since company fundamentals can change during the period. Investors must incorporate fundamental analysis in their investment strategy.

4. Don’t Hurry to Book Profit

 Investors get influenced by the smallest market news and rush to book profit. Selling a good stock to book a small profit is the worst investment mistake when you plan to invest for long term. 

5. Diversification 

Have you ever heard the saying –‘ Don’t put all your eggs in one basket’? This concept applies for Stock market investments also. Diversification should be the mantra for successful investing.

6. Track your investments regularly

Investing in stock market is not like a fixed deposit scheme where you invest and forget.Yo need to be proactive with your investments to gain maximum returns.You should be updated with movements in stock market. You should invest when the prices are low and sell when prices rise to make maximum profits.

These are some tips to help you to deal with stock market losses.

1.      You can take control of your trade if you accept the loss earlier.

2.      You should Review and evaluate your strategy and the stocks you have picked.

3.      Experienced traders will reverse their trade position in suitable conditions and even profit to cover their losses.

4.      You should use stock market loss as an opportunity to learn a new thing and develop new skills.

CONCLUSION

Stock markets moves in phases. If it goes up during one phase, it comes down during another. It actually depends on the performance of the economy. A stock that gave certain returns the previous year, may not give similar returns in the current year. The returns will depend not only on the company’s movement, but also on market conditions and state of the economy. It is risky to depend completely on the past performance of a company’s stock.

Profits and losses go hand-in-hand with Stock market investments. You can use the tips mentioned here and minimize your losses, but there is no guarantee of avoiding them altogether.

Watch the video to learn some tips on” How to avoid loss in the Stock Market”,  so that you can be careful with your investments.

We have discussed in the video “5 things you need to know before starting your investment journey”.