Right and wrong behavior ✅
Market downturns are a big challenge for investors, but the right actions can protect you from big losses or help you take advantage of opportunities. Here’s a comparison between right and wrong actions:
The right thing to do when the market is going down:
1. Analysis and calmness:
Analyze the causes of the drop to determine whether it is temporary or permanent.
Don't make quick decisions under the influence of emotion.
2. Re-evaluation of investments:
Make sure the assets you own are still fundamentally strong.
Continue to invest in assets with long-term value.
3. Risk Management:
Use Stop Loss to reduce losses.
Allocate a portion of your portfolio to stable assets or cash.
4. Buy the Dip:
If you are confident that the market will go back up, take the opportunity to buy good assets at a low price.
5. Maintain strong assets:
If you are a long-term investor, do not sell your assets due to short-term fluctuations.
6. Learning from experience:
Use this time to analyze your previous strategy and identify weaknesses.
Wrong behavior when the market is down:
1. Panic selling:
Selling your assets quickly because of fear of loss only locks in losses that may be temporary.
2. Lack of a plan:
Acting randomly without a strategy leads to greater losses.
3. Ignoring risk management:
Not placing stop loss orders or over-risking exposes you to large losses.
4. Invest all the money at the time of the decline:
Buying during a downturn may seem like an opportunity, but allocating all your money at once without planning could lead to losses if the downturn continues.
5. Ignore news and analysis:
Not following the news or ignoring the reasons for the decline may lead to wrong decisions.
6. Rushing to compensate for losses:
Trying to quickly recoup losses by entering into high-risk trades may make the situation worse.
