Friday, 22 April 2022

Stock investment is one of the most volatile investments. The causes of fluctuations in stock prices can be influenced by global and national economic factors. If stock prices rise, happiness for investors and traders. But what if the price drops drastically? How to deal with it and what to do?

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So to take steps to take when stock prices fall, we must pay attention to the following:

1. View stock price history

“History repeats itself” applies to the stock market, meaning that history will repeat itself. Charts of stock price movements that used to be repeated in the future.

When the stock market or stock prices decline, you should not rush to sell them because there is a possibility that the price will go up.

Especially if historically stock prices have been at their peak. For example, in the last 6 months, AB's stock price resistance point was $10 and is now down to $8 nearing the support point at $6.

Before the price touches the support point, the opportunity to pump or rise is very large. If it manages to be above the resistance price, the price movement will continue to rise where the stock will form a new resistance.

2. Focus on good fundamental stocks

The decline in stock prices is not the end of everything. If you are observant, this event is a golden opportunity to save profits in the future.

Stocks with good fundamentals or performance, both through financial reports and future prospects. To find out which stocks have strong fundamentals, you can check on several official sites.

3. Remember long term goals

A person decides to invest because he has clear financial goals, usually in the long term. For example, to fund childrens education, build a house, travel, or prepare for retirement.

If the stock price drops drastically, you should act calmly. Indeed, the decline cost you. But remember, while the time for achieving financial goals is still long, you should hold it or let it go. Later also will rebound again in time.

It is better to monitor stock prices and often read issues related to the sector of the stock being bought. From here, you can build the best investment strategy before finally taking profit.

4. Avoid panic selling

Let alone traders, some investors also often do panic selling when stock prices fall. Panic selling is the activity of selling part or all of the stock due to a decrease in price to prevent large losses. In fact, if we review again, panic selling is not preventing losses, but increasing losses.

If you can calmly deal with the downturn, there won't be any big sales. You yourself are not willing to sell a stock below its purchase price just because of a small drop. It's a good idea to review past prices, then relate them to current economic conditions to prevent wrong decisions.

5. Take a cut loss step

Cut loss, consists of two words, namely "cut" which means cutting and "loss" which means loss. So, cut loss is cutting losses.

Cut loss means an attempt to avoid greater losses by selling shares at a lower price than the purchase price.

For stock traders, cut loss can be done when the price of the stock you hold continues to fall. As for investors, cut loss can be carried out if there is a change in the company's fundamental performance.

Those are some steps you should take if the stock price is going down.

The stock price may drop drastically, but this condition does not necessarily make you do massive buying or selling.

It is better to analyze the performance of the stock before making a decision, so that there is a return that can be enjoyed when stock market conditions begin to improve.

• Lead image from unsplash