The stock market has very high volatility, almost every time the stock price changes. During the covid19 pandemic, the stock market on Wallstreet fell by up to 13% mainly due to market panic.Price fluctuations in the market will always be considered a natural occurrence by investors. The main factors that influence stock prices are external factors and internal factors. In general, novice investors will panic when the stock price drops drastically, and they will immediately sell their shares even if they lose, how do you deal with the stock price dropping drastically.
How to Deal with Stocks Dropping Drastically
- Thread starter Suba
- Start date
I have invested in stocks for many years, and have been through ups and downs in the stock market. When the stocks drop drastically, do not panic. In such situation, I normally would not sell the stocks immediately. I would try to understand the reasons of the drop and seek expert's advice.
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- #4
Actually, you can do your own analysis of why stock prices have dropped dramatically before you see an expert, whether the price drop in stock prices has fallen due to external or internal factors, do an in-depth study so you will find the answer.
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- #7
In fact, stock price fluctuations are normal and occur frequently, especially if the shares you hold are stocks that have big caps, there's no need to panic, let alone sell shares. So you just need to keep your shares well, and receive dividends
If the stocks you have start dropping the price, and if the stocks are from the company involved with sustainable business model, I think you need to buy more stocks so that when the market returns, you make a huge profit.
There are many stock traders who tend to use the stop loss feature on many trading platforms. Such kind of stop loss feature may help you a lot in order to deal with your losses. Regardless of that, dealing in the stock market could be a big challenge.
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- #10
Stock traders will of course have different strategies from long-term investors, because stock traders only have a limited amount of time, so they use stop losses, even cut losses. Meanwhile, long-term investors have time to analyze the reasons for the decline in prices whether external or internal factors.
Since I am not an expert in investment, I would seek the advice of an expert in a bid to know what to do in case of a drastic drop in stock prices.
I am aware that the impulsive response would be to buy stocks whose prices have dropped. To ensure that any decision taken stands the test of time, one however needs to possess some in-depth knowledge of the companies whose stocks he/she is dealing with.
I am aware that the impulsive response would be to buy stocks whose prices have dropped. To ensure that any decision taken stands the test of time, one however needs to possess some in-depth knowledge of the companies whose stocks he/she is dealing with.
I think that it is always advisable to use stop loss, no matter if you are a short-term trader or a long-term trader. The fact of the matter remains that if you do not use stop-loss, then you will suffer from huge losses. So, overlooking stop loss is a big mistake.
It depends on whether the drop will be long term or short term. Of which you won't know that if you are not so good at studying the market and doing analysis. Investment in stocks should be done with so much knowledge and understanding to avoid panic.
