What not to do if the Stock Market is going Down?

 Never panic.Learn;What not to do
  • By BYSOS Expert
  • May 06, 2021

The first thing you need to do is never panic. Every problem has a strategy and solution. Experiment with stock fantasy games and simulators to gain experience.

We all take advice from our financial advisors whenever there is a decrease in our portfolio. It is a human tendency to ask, "What to do now?" but we are asking it in the wrong way. We should always ask "What not to do now?"

Let us try to answer it in a simple way; I Hope you remember two proverbs "Don't make decisions when you are happy, sad, angry or afraid" and "Patience is a virtue". Now let us relate these two with the stock market. Whenever we are happy, sad, angry, or afraid, we tend to panic and usually, we tend to panic selling of the stocks. This will affect the worth fluctuations in the portfolio. You can always protect from market risk by hedging your portfolio through diversification, which incorporates holding a wide variety of investments.

Let us dive a bit deep into the same:

You should always know your risk tolerance level to avoid panicking during the downturn and choose the appropriate investments. It is recommended to try playing fantasy games like; BYSOS stock fantasy games (before investing money in real stock market) which can provide insight into the market's unpredictability and your response to it.

Why is it said not to panic?

Investment is always your retirement safety. You should remember that the stock market is recurring and stocks going down is unavoidable, but a downturn is temporary. You will need to think long-term and avoid panic selling when stock prices go down.

Being a long-term investor, you should know that the market is timebound and will retrieve eventually. Remember, when stocks are going down, it may not be the right time to try the market.

These two points may help you save your portfolio.

1. Understand Your Risk Tolerance:

It is normal to remember our first experience, maybe in any terms; let us quote it as 'facing a market downturn'; this will be in your memories for the long term. With this experience, you will be able to determine the risk tolerance of an investment's time horizon. The main goal is to generate income in retirement. So, if you are retiring invest in a low unpredictable stock or invest in several securities with different maturities. And Gen-Y can invest considering long-term growth as you have got long years to cover up for any losses.

2. Prepare for—and Limit—Your Losses:

If you learn how stock market works, you will be able to invest in a clear mind. Analyze whether you should buy or sell more. However, have a mindset to face the worst and plan the best strategy to hedge against bear risks. If you are a blind investor, then you are making yourself at risk of significant losses when there is a market crash. Hence, it is suggested to have a great strategy that will help you to spread out the exposure and gradually reduce the risk.

Conclusion with an Add-on:

Learning, "what not to do when the stock goes down" is important because a single crash in the market will damage your mental and financial health. And, if you are an investor without any experience, you may be more affected. So, at the bottom line we would again like to add " Never Panic Sell" into the bear market and always stay in for a long term.

You can experiment with stock fantasy games like; BYSOS, to identify your risk tolerance and how to stay away from the Bear market.

Compete with thousands of contestants in the BYSOS stock fantasy game and get your portfolio to the top! Practice trading strategies before starting to trade in the real stock market. Once you gain the practice required and you have the confidence to enter the magical world of stock market, it is time to begin your journey of success.

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