Cant we prevent from huge losses?

swan03 · 1 Cant we prevent from huge losses? Mon Nov 07, 2011 7:14 am

swan03

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Any idea how to prevent from losses? I mean, not in the current market.

sas · 2 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 7:23 am

sas

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swan03 wrote:Any idea how to prevent from losses? I mean, not in the current market.

I think it depends, we can't specifically say it should be this way,
early exit with good profit
early exit even with a small loss, if it confirms holding it may cause huge loss
invest in companies which have a good potential to grow-below IPO price & below pp price if you can
and also,
by not going after rallies(which is very difficult to set our mind Very Happy

)
by not going after IPOs-if there are lot of people willing to sell cheap Very Happy

sas · 3 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 7:41 am

sas

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and also by listening to some one you trust, and act accordingly
http://forum.srilankaequity.com/t1868-turning-away-the-life-raft
but it's sad they are not willing to talk Sad

Sudarshen · 4 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 9:20 am

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Hello sas,

Is that mean we can't do long term investments ?

sas · 5 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 11:08 am

sas

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Sudarshen wrote:Hello sas,
Is that mean we can't do long term investments ?

I'm not a suitable person to talk about "longterm", just see my path, in the very first link you can see my mentality when entering to the market "pathetic"
http://forum.srilankaequity.com/t6138-portfolio-advice-needed
http://forum.srilankaequity.com/t8104-investors-vs-traders
http://forum.srilankaequity.com/t10009-online-trading-for-beginners

I wanted to be a longterm investor, but
http://forum.srilankaequity.com/t2111-flch-oversbcribed-by-45-times?
http://forum.srilankaequity.com/t4919-rich-and-flch?

if I can keep FLCH at 3.30, Rich at 9.70, lolc 83.00 or lower than that, isn't that better ?
see I didn't violated my signature, its golden words by SLSTOCK if you ask, I'm only adapting to the changing environment

sriranga · 6 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 11:48 am

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Below are the common blunders in stock market trading.

Lack of plan- Exposing yourself to market dangers without a specific plan in mind can only lead you to deep losses. Your initial steps in stock trading are so critical that you should be doing your homework before you decide to join the bandwagon. Your entire investment is likely to fail without a clear plan in place.

Lack of strategy- Strategy is the most important factor that can either make or break your opportunities of achieving success. While it is important to read instructional tips from highly experienced stock trading gurus, make sure to check any financial commentaries against other equally trustworthy sources. Knowledge is power. Stock market is quite volatile. Your researches would come handy when time comes when you are faced with choices of which stocks you can put your money on.

Lack of patience- Don’t rush your dreams of earning quite a lot of money overnight. Remember, Rome wasn’t built in a single day. Experience is what you need to gain in order to navigate into this tricky business filled with mazes. Manage your expectations. Expect some losses along the way. Just don’t lose sight of your goal of making hefty profits. Rash decisions do not make you rich in this business.
Investing beyond your financial means- This will choke you financially. The volatility of the market might bring down the value of your investment to zero overnight. Only invest in the amount that you are willing to lose.

Lack of diligence- Nobody in the world of financial trading is absolutely perfect. Even the most seasoned experts are still doing their homework. It’s always subject to dynamic changes all the time. Be diligent and continue the learning curve. Losses will always remain as an inherent feature in any line of business. The goal is to make your profits far larger than your losses.

Lack of portfolio management- You need to study and assess the amount of investment you place along with your wins and losses. This will aid you in making a sound financial decision and strategy. Create a stock portfolio and spend good time in tracking everything from the start.

Risks and opportunities are two sides of the same coin. Learn when to and when not invest. Keep abreast of the latest update in the stock market.

sriranga · 7 Break even Table to recover your loss Mon Nov 07, 2011 11:54 am

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Cant we prevent from huge losses? Loss10

Tiger · 8 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 12:09 pm

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swan03 wrote:Any idea how to prevent from losses? I mean, not in the current market.

As soon as you realize that you made a wrong decision, cut your looses. Some examples of things that you can do are; 1) just dispose 50% of your holding 2) stop putting more and more money just to average 3) diversify your PF 3) Hedge the PF if possible (e.g LIOC Vs VPEL, DPL,RCL ideally these should move opposite direction).

Slstock · 9 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 12:28 pm

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1) Firstly need to value your company (ex : PE, NAV etc) compared to market.

2) then identify/have a period of investment.

3)

a) If the company is still solid, the value of the share you hold is still within range

i) if for long term do not worry ( as you will turn your loss to profit with time )
ii) if for short term see the current market trend . If you think there will be huge correction in the market
you can sell.

b) If company good but is overvalued according to your analysis

i) for long term you can sell and buy back later or just hold and forget ( remember long term people do not really care about short term price fluctuations). But in a run if a share gets hugely overvalued then you can sell and buy back later if you are monitoring the market frequently

ii) short term, sell . You can cut losses by selling once you have 10% loss or so , so the loss does not grow bigger

c) if company is bad and is overvalued

Long term , short term. SELL, SELL. And don;t take unnecesary risks or gamble.

Portfolio diversification, averaging ( if you can identify the bottom ( which is hard) and selling with small profit next time it goes up helps to reduces overall losses. But you need to be careful when you average as you need to know when to enter and exit with new shares ./ else you losses with be more)

I know this is harder done than said.

I am sure others will contribute with more strategies.

swan03 · 10 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 5:42 pm

swan03

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Thank you everyone for your valuable advises.

Universalgoal · 11 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 5:56 pm

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sas wrote:and also by listening to some one you trust, and act accordingly
http://forum.srilankaequity.com/t1868-turning-away-the-life-raft
but it's sad they are not willing to talk

bcs they are also loosing huge these days Very Happy

sas · 12 Re: Cant we prevent from huge losses? Mon Nov 07, 2011 9:06 pm

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Universalgoal wrote:

sas wrote:and also by listening to some one you trust, and act accordingly
http://forum.srilankaequity.com/t1868-turning-away-the-life-raft
but it's sad they are not willing to talk

bcs they are also loosing huge these days

The person I was referring to, I don't think so.. Smile

Aamiable · 13 Re: Cant we prevent from huge losses? Tue Nov 08, 2011 8:52 am

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sriranga wrote:

Generally market further depress in November and December, some more credit to be cleared according to CSE circulars if there are further losses impossible to recover. all are loosing in a market like this, best thing is to avoid credit .

rijayasooriya · 14 Re: Cant we prevent from huge losses? Tue Nov 08, 2011 11:13 am

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swan03 wrote:Any idea how to prevent from losses? I mean, not in the current market.

It is simple isn't it ? Do not wait till it becomes a huge loss.
"Letting profits run and cutting losses short"
Usually we get huge losses because of running after fake rallies.So when u are going after rally never worry to sell at a recovarable loss.All of us can make wrong decisions.Therefore correct that decision before it gets worsen even at some sort of cost.
But this does not mean that u can do this everytime.