[Summary]
Shock selling is when you lose your cool due to a sudden drop in stock prices and sell in a hurry.
When there is a sudden drop, you will feel more anxious, but if you sell based on emotion alone, you may end up giving up near the bottom.
The important thing is to create rules in advance and determine the order in which to check them even when there is a sudden drop.
What is panic selling?
Shock selling is the act of selling investments out of fear or impatience.
This is especially likely to happen when the market as a whole plummets or when the stocks you own decline significantly.
why does it happen
Spooky selling is caused by fear of loss.
People tend to feel the pain of loss more strongly than the joy of gain.
Therefore, when unrealized losses suddenly increase, the desire to escape quickly becomes more likely than a calm judgment.
How to prevent
To prevent panic selling, advance rules are necessary.
- Decide on a stop loss line
- Don't make your position too big
- Don't use too much credit trading
- Check financial statements and materials
- Consider whether it is an overall market decline or individual factors.
Summary
Shock selling is a common mistake made by beginner investors during a sharp decline.
Rather than selling based on emotion, check the rules you have set in advance and the reason for the investment before making a decision. The more steeply the prices drop, the more meaningful it is to decide on the order.