Sol Palha: Financial & Economic Insights How To Stop Losing money in the stock market

How To Stop Losing money in the stock market

How To Stop Losing money in the stock market

Stop Losing money in the stock market

And how to profit from this experience

Imagine for a second that from the day you started to play the markets you never lost; you always came out ahead each and every time no matter what stock you bought or sold; sooner than later winning would become boring because you would not have anything to compare your wins too.

The reason a win feels so good is that you compare it to a point in time when you lost something. Not only do you bask in the new felt emotion (because you remember the pain of losing), but you also feel great because of the financial windfall.  What we are trying to state here is that losing or failing is an important and integral part of winning and success and that without the other life would be drab and dry.

It can be viewed as a positive development provided you learn from your mistakes

However, what happens over time is that most individuals seem to think that they can do nothing but fail or lose, especially when it comes to the markets (this occurs on a subconscious level, that’s why more individuals lose than win when it comes to the financial markets).

How to Stop Losing Money 

The way to stop this evil process is to immediately understand the purpose of losing and failing. When you lose or fail it means you have done something wrong, you are being given a second chance to evaluate where you might have strayed or erred. Most of us instead just keep doing the same thing that made us experience our first loss, and we hope that sooner or later we will hit the mother-load by luck.

If we examine the reason we lost or failed when investing in the stock market, we see exactly what it was that caused us to fall off the tracks, and, even if we don’t succeed on the next attempt, we will at least make sure that we never ever repeat the same mistake again.

Through constant analysis of our mistakes, we can finally develop a system or systems that can with patience and persistence help us win in the markets. More importantly, it could help us with the most important battle in our lives: the quest to find happiness, which is really nothing other than the quest to find inner peace. Remember this, nothing good ever comes easy; if it did it was not worth it in the first place.

Some notes on dealing with Financial loss from Psychology Today

Feeling out of control, financially, can cause any investor — large-scale or small — significant anxiety.  “Recession depression” is a real effect.  69% of young, employed Americans worry frequently about income instability, and 67% of them fret about having saved too little.  More than half of millennials today are worried about losing their jobs.  Over forty per cent are worried about another economic crash or major recession, which could leave them without enough time to rebuild their retirement savings.

In part, this investment-related anxiety is attributable to recency bias — a cognitive heuristic in which we overestimate the significance of the most recent period in time.  We also experience a loss aversion effect, in that the anxiety, depression and other bad feelings accruing to financial losses usually outweigh the positive emotions we feel when stocks do well.  Money, in short, is always a significant stressor, and high levels of stress often correlate with increases in depression or other mental illnesses.  Fluctuations in financial stability can have both short-term and long-lasting effects on mental health. Psychology Today

Imagination was given a man to compensate for what he is not, and a sense of humour to console him for what he is. Francis Bacon 1561-1626, British Philosopher, Essayist,

Articles of interest:

Technical Analysis

Why Mechanical and Technical Analysis Systems Fail

The Limitations of Trend Lines

Contrarian Investment Guidelines

Inductive Versus Deductive reasoning

Mass Psychology Introduction

Crowd Psychology and Markets


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