Savings are invested to pay money in the markets. This is an indisputable fact among any investor. Otherwise it would be completely absurd. But sometimes, and for many and diverse circumstances, the opposite happens. Money is lost in equity markets to the disappointment of users who check how your balance has decreased in the checking account.
If these operations rarely go wrong, it may be due to a timely fact and even anomalous that generates this situation. An unexpected trend change in the markets is news of great importance that changes the evolution of a value or even an unexpected event can cause this situation. But it will not pose any problem in your relationships with financial markets. It's about the bag after all. Where sometimes you win and others you lose.
Much more serious will be then if these losses of money in the stock market operations are more habitual of the normal thing. Then the causes will be more complex and surely the culprit will be yourself, and not the markets. The origin of these operations it can be due to many causes and of diverse nature. It will be convenient for you to review them because it can help you fix those problems that you have with equities. And that it is costing you money, more than you can assume on certain occasions.
Losing money: what are the causes?
It will be time for you to examine your conscience to see what happened to you and why you lose money in the financial markets. One of the first causes is due to a poor selection of values that will make up your investment portfolio. In particular, given the lack of knowledge to know what the real status of listed companies is. You cannot and should invest your money in a company whose line of business you do not know. In cases, you have even simply never heard them.
You must be familiar with their business activity. To do this, every quarter publish their income statements. They are public and you can access them with total freedom. They will give you a great signal about the health status of your accounting. To the extent that it is a point of support to make the selection of the aspiring securities to make up your portfolio. It will be of great help if you want to carry out operations with greater security and guarantees.
In this way, your decision will be based on objective data, and not on mere assumptions as the most reckless small investors do. It is not surprising, therefore, that in the end they end up losing money in the movements made in any equity market. You must correct yourself so that this does not happen to you again. Not in vain, you will have all the ballots to continue wasting euros in the bag.
Get carried away by unsubstantiated rumors
This is another of the main reasons why you lose money in equities. You go to forums with poorly contrasted messages, or at least of doubtful origin. The effect could not be more counterproductive for your interests as a small investor. You cannot go for these kinds of strategies, unless you want to be exposed to a large loss of your equity invested in equities.
You have to differentiate between what the contrasted information is and the mere hoaxes that run every day through the social headquarters and the main Internet forums. The latter are highly toxic for your interests, since they can even induce you to invest more money than you should. The best way to avoid this unfavorable scenario is to ignore these kinds of unfounded comments.
From now on you must be very careful where you get. Because, in short, there are many euros that you will be playing through the stock market operations that you can open under an investment strategy. Not in vain, do not represent any special technique to buy and sell securities. Do not forget it nor do you want to take more than one surprise from now on.
Not defining the investment approach
Before entering the markets, you will have no choice but to consider an investment strategy when it comes to term of stay. It is one of the most effective ways you have to protect your savings. Since depending on this important variable you will be able to choose some values over others. It will be a help you have to develop your investment portfolio.
As a consequence of this unique strategy, in cases aimed at longer terms, you will have no choice but to go to the more defensive titles of financial markets. And if they can incorporate the payment of a dividend to shareholders, then much better for your interests. You will have a fixed and guaranteed annual payment in your checking account that will make the liquidity more notable after making these purchases.
On the other hand, in the faster processes the opposite will happen. That is, you can perform operations with more speculative values. With no other objective than trying to achieve the maximum capital gains in the shortest possible time. As you will see, each period of stay has its own treatments. They are differentiated, both in the approaches and in the investment process itself.
Shopping outside of the uptrend
You may not even notice the trend in a stock or index. It's one of the more serious mistakes you can make. Because if you buy it, you formalize it under a downtrend you will have all the ballots to leave you a very important part of the invested money. While if it is lateral, you will have the contributions without any definition. It will not mean any added value to the operations you carry out from now on.
In order not to make these serious mistakes, the best solution will come from accurate information on the current situation of the financial markets. It will be the thermometer that measures the most appropriate moment you have to boost your investments from this strategy to take advantage of equities. In this case, you will only have to invest your savings in the most bullish scenarios. It will be the key to be more successful in your movements in the stock market. Both in national and international markets.
From this scenario, a very useful advice is to promote actions that help you avoid these scenarios. Even to improve investment returns. So that in this way, every time you get involved in a variable income operation that is more profitable. It is one of the methods you have to achieve it. They are not efforts, but they are with a significant dose of discipline.
Not rectify in time
If you do not want to increase your losses, you will have no choice but to change the course of your actions in the financial markets. One of these measures will come from the sale of your shares. No other purpose than to try to stop losses and that they do not shoot up to levels that are difficult for you to bear. It will be a resource that you will have to use in each of the most negative situations that comes your way in stock market operations.
They are security that you will lose money, but more will be or you do not stop these movements in open positions. Through great speed in your actions that leave no doubt about your true intentions. You can even use the traditional ones stop loss orders. Without having to assume greater expenses in its management.
This investment technique will be very efficient every time there is a significant change in trend in stocks, indices or equity sectors. You will have to admit that you have made a mistake and close operations radically. As an alternative, you can opt for other values that have a better technical aspect, or at least fundamental. It will be a second chance that you will have in the markets.
The best tips to avoid mistakes
In any case, you can apply a series of recommendations so that you do not go to these extremes. And in this way, ensure that from now on the losses in the equity markets stop, even if little by little. It attends to the following approaches.
- Do not get confused in the deadlines, unless you can pay dearly for the mistake. Before investing it will be convenient that you define the permanence of your investment.
- Do not open positions in any financial asset that moves under a downtrend. Nothing good will happen to your portfolio for sure. Not surprisingly, it is one of the scenarios to invest savings.
- Ask yourself which are the companies that you better know to pour all your strategies into them. You will have taken the first step to optimize operations. Surely you will do better this way.
- Don't try to experiment with equities. Leave it for other things since these kinds of risky strategies are worthless with money.
- Don't think that you will always make money on equities. It almost never happens, although what you should avoid is that these situations are exacerbated for a long time.
- Nor are you sure about your intentions, it is best to park the operation. Even if it is temporarily, you will have time to channel it in the coming months.
- Don't frivolize the bag as if it were a bet. The risks involved in operations are very frequent. Do not doubt that you will pay them with money that will disappear from your checking account.