When you lose money in the stock market, especially a large amount, it may seem like the end of the world. While a major loss can make your heart sink and make you feel helpless, it’s important to pick yourself back up and try your best to get through it.
While that’s easier said than done, we’re here to help. Below we’ll give you a few of the best tips for coping after suffering a major stock loss.
1. Accept Responsibility
The first thing you need to do after a loss is to accept responsibility for it. While many factors may have led to the loss you experienced, you have to decide for yourself what your next action will be.
Try your best to stop being angry and accept what you’ve been through. Only then you can start taking other actions to deal with it and learn from it.
Remember that accepting responsibility isn’t necessarily the same thing as accepting that you were to blame or at fault for it happening. However, it does mean that you have to decide what the next step for you to take is. You’re the one who has the responsibility to continue on from your loss and learn from it.
2. Stop Trading For a While
While your instinct may be to start making new trades as soon as possible to make up for your loss, you should do the opposite. It’s important to stop trading for a little while and take a step back from the situation.
Let yourself breathe and distance yourself from what happened for a little while. Once you’ve relaxed a bit, only then is it time to start reflecting on what happened. Was there anything you should have done differently? What truly led to your loss?
Take some time to reflect on your stock loss and try to figure out what the cause was and if there are any clear lessons you can take from it.
3. Put Your Stock Loss into Perspective
While a big stock loss can be frustrating, it’s important to keep things in perspective. It’s probably not the end of the world. Even the best traders have major losses from time to time. It doesn’t define your worth as a stock trader and definitely doesn’t define your worth as a human being.
Find things to be grateful for in your life. Remember that stock trading is probably only one part of your life. You probably have many other things in your life such as an amazing family, a great home, good health, or other interests and hobbies.
Losing big in the stock market can sometimes feel like a ton of bricks has hit you, but it’s only one aspect of your life. Don’t make it bigger in your mind than it has to be.
4. Consider Getting an Attorney
While an attorney isn’t needed in all cases, there are some instances where you may want to seek legal representation for your loss. You may need to take legal action.
If there was any negligence or misconduct on the behalf of your broker you may be entitled to take legal action against them. An attorney can help you deal with a loss in several ways and make sure you get what you deserve back to you.
It’s very hard to take this kind of legal recourse on your own, so it’s important that you have great representation on your side if you need to initiate an investment loss lawsuit.
5. Gain Some Inspiration
Any successful stock trader, entrepreneur, or athlete will likely to tell you that they have learned much less from their successes than from their biggest failures. The same can, and should, be true for you.
Use your loss as a tool for learning how to become a better investor. Once you’ve gotten through a lot of your anger and frustration that was tied to your loss, use it to learn and be inspired.
Pinpoint exactly what happened and let it drive you to succeed in future trades. Let your losses motivate you to continue on to greater successes in the future.
6. Create a Plan to Get Back in the Game
After you’ve done plenty of reflecting or taken any necessary legal action, it will eventually be time to start making a plan to get back into the game.
Create an action plan for your future trading techniques incorporating any lessons you’ve learned from your loss. Should you have sold your stock earlier on? Did you miss any warning signs?
Set better standards for yourself and set some hard rules to live by when trading. By developing a solid plan and learning from your losses you’ll reduce the chance of a major loss happening again.
Once you have a solid plan it’s time to start trading again. Don’t jump in too hard and strong but instead start small. Simply aim to start building back some confidence in your trading abilities. Once you’re back into the groove again, then you can start to ramp it up.
7. Tweak and Re-Tweak Your Strategy
Once you’re feeling confident trading again you can hopefully start to feel more like yourself. Remember what made you successful in the first place and start refining your strategy even more.
Create a trading strategy that works for you and try to discover what your personal strengths and weaknesses are. See if you can recognize any facts about yourself and your trading style.
Knowing yourself is important. By suffering your loss you’ve likely learned a good bit about stock trading as well as your own style. Once you start trading again you can learn even more and perfect your own successful trading strategy.
While you can’t go back in time and stop a loss from happening, you can learn and grow from it. By using the tips above you’ll improve your future results and will eventually make up for any losses you’ve experienced.
Dealing with a large stock loss and need an attorney? Contact us today to learn more about what we can do for you.