How to recover losses in stocks ?

Did you invest $ 1000 or more and now you see only half of the value or even less ? In this blog, i'll explain how you can minimise your losses and recover as quickly as possible ?

There are three things to keep in mind when you invest in stock:
1. Never be greedy, 5% gain is better then 20% loss.
2. Don't invest the money which you need it in near future.
3. Don't borrow money to invest unless your sure to make profit out of it.

I'll give some example to make it more clear.
As an investor you want your money to grow as quickly as possible. Instead of waiting for a stock to reach 100% in a single day, make small gains say 5% daily and you can make 100% out of your total income after 20 days.


There is no gain or loss in stock as long as you don't sell it. Considering the current volatility of the market, its unsafe to keep money in the market as you never know what will happen the next day.

Suppose you invested $1000 in a stock, at one point you may be up by $ 20 which is good money for lunch and dinner and you decided thats not enough and you want more. The next day you may see yourself down by $20 because of some crisis or any reason.

And now since your down by $20, you don't want to sell it in loss. The next day the stock may be down by another 10% now your down by $120, and now you don't want to sell it with such big loss. So now you may wait for another day, or even month hoping the value of your stock rises. You may end up lossing more everyday. 

There are chances of recovery but it may take 2 month to 6 month down the road.  So now if you look at the bigger picture, you may see, you invested $ 1000 but at the end of 6 month, your in loss or may be break even.

The key point here is never let your loss go out of hand which you cannot afford to loss it. If you make mistake in investing, then accept your losses and move on because time is money.

Now what about your losses ?
1. You may claim your losses when you file your tax return.
2. You still have money to invest or may be use it for some other work.

One of the big reason may people are in loss because they are forced to sell of the position because they borrowed money for investing or may be they used money which was very important for them like education or house or marriage and after some time they need that money for these activities. As an individual investor, I would suggest never borrow money or never use money which you need may be in next 6 month to 1 year time.

You may start saving from now, save $100 or $ 200 every month from your paycheck for investing in stocks or any kind of business.

Suppose you took a bold decision of selling your stocks at 10% loss for $1000 investment you will have $900 in hand.

I prefer taking 2% loss and 5% gain with my investment. If i make a wrong investment, i end up lossing $ 30 with commission which would mean 3% out of $1000. Suppose i make a right decision, then i make 5% gain or more. Even with $900, i can make $ 45 in a single day with 5% gain. So when it comes to the end of month, it would be $900.
Suppose i make 50% correct decision and 50% wrong decision, i still end up 20-30% in profit at the end of the month.

The most important thing is keep revolving your money.

One last word, if you keep lossing money in stocks, then try to invest in some other places, may be start your own business or anything. Keeping as CD is another way of investing your money safely.

Good luck.