How to Trade Again After a Terrible Loss in the Stock Market

loss in the stock marketLoss in the stock market is something that stock investors don’t like to talk about. Let’s be honest, we all lose money trading stock and sometimes we lose very big.

Avoid talking about our losses won’t change a thing; in fact, when you do talk about your losses you may be able to receive some words of encouragement, or even some advises on how to be more careful next time.

A big or terrible loss in the stock market is something every stock trader will have to face at some point in time. Some investors are so unfortunate that they loss big on many occasions.

The hardest part of that is the emotional toll left by those types of losses. Although many stock investors know how to deal with that, many others don’t know how or just simply can’t completely recover from that.

So how do you recover from a terrible loss in the stock market and start at it again? This post should be able to give you an idea as of how you can go about it. By adding what you’ve already known to these advises here you’ll be good to go.

Take a little vacation from trading

Going straight at it after a serious loss isn’t a good idea at all. I’d advise you to take a break from trading altogether. Even a short break will definitely be helpful to you because you’ll need to rewire your mind and your thought process in order to continue successfully.

If you don’t stop and try to find why you’ve suffered such a cruel loss, chances are you’ll keep losing. The trend will continue for you because you aren’t taking any action to fix it in the first place.

Set a more effective plan

All stock investors should have a plan and this plan should be followed religiously. Not having a plan in place is a huge mistake. And it’s also a recipe for a huge loss in the stock market.

If you think your plan could be part of why you’re loosing your money. Think critically and reset another more effective plan.

It always good to have a plan, but not all plans are created equal. You may have one but it can’t work in your best interest.

That’s when a need of plan is needed in order to be on the right track.

Watch the market for its movements

You don’t have to trade every day as a stock trader. Watch the market and see what’s going on sometimes.

Some stock traders would make a few hypothetical trades in their head to see how it would turn out if they did trade for that day.

But if you happen to see that you were going to make a huge profit, don’t beat yourself for that, you don’t know what was going to happen if you really put your money on the line.

You might not even have put your money into the stock you traded hypothetically. Your thought process wouldn’t be the same because you’ll know that your money would be on the line.

You can report your loss on an income tax return

At the end of the year in which you’ve sold your shares and accepted the loss, you can add that on your tax return. It’s a good idea to use and get your tax’s burden reduced.

The Internal Revenue Service states:

Losses in excess of this limit can be carried forward to later years to reduce capital gains or ordinary income until the balance of these losses is used up.

In conclusion

If you haven’t suffered in big loss in the stock market before, consider yourself very fortunate. Trading penny stocks is something that requires lots of luck, although education plays a huge part in being successful at it.

In the event where you lose a huge part of your capital, you’ll need to take action and be serious about it.

From this post I’ve shared a few advises with you as of how you can proceed with your life after such a big loss. Hopefully they’ll be helpful to you if needed.

Photo credit: Jayy’s76 Blog

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