If you want to win on the stock market. You need to make smart trades & investments, and maximize your profits. Often you’ll watch the brokers or traders who do the best during the trading week and try to learn from them. This is definitely a good strategy for learning tips, but remember that the biggest stock losers also have a lot of wisdom to offer, and you should watch these stocks closely.
If you notice that several stocks are performing poorly in the market, start paying attention to patterns within these stocks. Are they all concentrated in a single industry? Are they stocks that are performing poorly in their industry overall?
Watching the losing stocks can also reveal current or even future trends in the market, and help you in making better trades today or later on. Pay close attention to detail; why did the stock decline? What industry is it in? Who is buying and selling it, and for how much? Were there any current events that caused a drop or spike in the stock prices?
Catalysts are those “current events” that affect the stock prices. A new CEO, new product release, large contract or work order, or perhaps even a company controversy can all affect the price of a stock. Be sure to pay attention to these catalysts, as they can help you predict the value of these “losing stocks”. For example, if you know the company just released an expensive product that flopped in retail stores, you can probably expect that the company’s stocks will fall slightly.
You can view a stock’s chart, which can tell you how it’s performed in the past. IN addition to a company’s earnings report, this can help you identify trends within the company’s financials and their stock prices.
If the stock seems to fall and bounce back frequently, the company may be just getting its feet wet in their industry or offering slightly better products or services than in the past.
If the stock continues to dive, along with the company’s earnings reports, then it’s safe to say the company is having some financial issues. Be sure to monitor the industry the company is in as well, and look for similar trends within similar companies and stocks.
Sometimes you need to cut a losing stock off as soon as possible before it hemorrhages any more money. Other times, these losing stocks will make a comeback and actually end up performing better down the line than some of your best stocks.
Often, the losing stocks will sell for cheap at the end of a bad trading period, and if you purchase them at a lower price now, you can sell them for (presumably) a greater profit down the road, assuming the stocks begin to perform better.
Hopefully, it’s not you trading the losing stocks, but whether they’re your stocks or someone else’s, a failure is a learning opportunity. Losing shows you what not to do the next time you go to trade. If you trace your process back to its origin, retracing every action and step that led to the loss, you’ll likely find where you made the mistake(s).
Maybe you didn’t research the company or the stock’s performance, maybe you simply made a bad trade or waited too long to trade; whatever the case, you should watch the losing stocks and learn from your mistakes.
Sometimes you just need to cut your losses and offload the bad stock. While it may be incredibly difficult to take such a blow to your portfolio (not to mention your pride), it’s important to know when your stock is not making you any money.
If you notice a trend in the market of other traders dumping the same stocks or a declination in the overall value of the stock over time, maybe it’s time to consider dumping that stock.
Taking action before your position gets worse is always the better option. You might end up having to sell some stocks at a loss, but if you wait longer you may have to sell them at even more of a loss. It’s always better to act quickly and precisely than to wait until the bitter end.
If you want to avoid losses all together, you can set controls for your stock. Basically, a control sets a minimum number to sell the stock at, and it’s normally above your buy in price. If the stock goes up, your control should move with it to guarantee you make money on your investment.
The Market Can Change At Any Time
The stock market fluctuates often, in an almost impossibly unpredictable way. No one can accurately predict whether the stock market will rise or fall, or if individual stocks will perform better or worse, but by observing trends in traders, and also in stock price, market fluctuations, company earnings, and catalysts, it’s possible to get a general idea of how your portfolio may perform.
Watching the stock market losers is a great way to gain insight into the market, stock’s industry, or the company itself. Pay attention to patterns, catalysts, and trading trends for particular stocks, and know when to cut your losses.
Just because a stock is performing poorly this week doesn’t mean it won’t perform better the following week, or even a few weeks from now. Temporary poor performance is not indicative of a poor investment, as we know the market rises and falls.
Learning from your mistakes is as relevant in the stock market as it is in life. If you kept trying the same thing the same way, and always failed at it, would you try a new way of doing it, or try doing something else entirely?
Self awareness is equally as important as training and research in the markets. Know what you’re capable of, how far you’re willing to go, and what capital you have to work with. Don’t disregard those losing stocks; they may just end up being your big payout later on down the road.