Maintaining Your Composure When Stocks Are Down

“You don’t lose until you sell” is what they say. Does anyone tell you about all the emotional baggage that comes with trading stocks and options?

Probably not. It’s a mind game. It tricks you into thinking you know everything about the stock market and quickly reminds you that you know nothing at all.

There are many different ways to win in the stock market, but there are four hacks that particularly make a difference.

Being patient and holding through the storms.

Stocks are going to be down at times — very down.

So down that, you’re going to wish you sold at a $1k loss but instead are in a position where you’re down $3k instead.

It’s fine to be down in long-term plays.

Not everyone can get on a hot streak and maintain their profits forever. Even the whales who play the market give some of their gains back every once in a while.

The next time one of your plays is down, don’t think instantly about setting your stop loss until you’re for certain you’re going down a sinking ship.

My girlfriend and I have had several instances where we sold a day before we could have had a $1,000 pop the next. So hold through the storms, and you’ll be rewarded.

Not being emotional when your plays are down.

Most traders who take L’s love to revenge trade.

Say you day-trade an option that Amazon will go up, and you can profit. You start the position, then you’re down big.

A person may switch from calls to puts and lose that way too. Now they’ve lost in two different ways. More plays do not mean more profits.

You have to look away from your stocks if they’re bloody red. But you also have to monitor them and choose when to exit properly.

Being aggressive when the market is bullish.

If you’re a bull placing call options and making bank, keep the flow going. Hold if you’re up and want to be greedy, but understand there are pullbacks.

Nothing is better than being up 20%, 50%, and 100% with extra time on your contracts.

You can afford to be greedy and give up some gains for a bigger pop the next day. Everyone’s happy when the market is green because profits are fantastic, and we’re in the sense of euphoria — like “nothing could go wrong.”

Aggression pays when you’re right. Aggression kills when you’re wrong.

Taking profit and playing the downside.

“Take profits when you’re happy.” It’s essential to stay consistent in the stock market. It’s impossible to time the market, so don’t try.

Once your stock has run off and you missed the boat, it’s time to look for puts.

You can make money on the upside just as much as you can make money on the downside.

Flip the charts upside down and play it the same way. Stay up to date with the news on your stocks and the overall market, and be aware of corrections.

Final Thought

As someone who is constantly investing in the stock market, I’ve seen many green days and a lot of red days.

Controlling your emotions on the red days is the hardest skill to develop, but it will help you maintain your composure and protect your profits on the great plays you entered.

Don’t panic when things go red. Instead, look at it as a discount opportunity and come out at break even or profitable, at least.

Trading is a sport. Some are built better than others. Sometimes, less is more.