An investor can do loads of research and market study on the buying of a particular stock which might turn out to have huge potential, but if the market indices happen to be negative then it is mostly the wrong time to buy those without any doubt. A good stock will mean nothing if the market is positioned to move in the opposite direction of your expectations even if the stock has tremendous accelerating earnings, rising sales, an up-trending chart pattern and a strong industry group. In the end it will mean nothing. When a particular stock is purchased the investor has to decide fast to hold it or sell it. If the position shows a profit, hold as your judgment is correct. If the position shows a loss, cut it quickly and don’t rationalize the situation before it doubles in size. The whole thing is dependent on your timing of the decision. One decision might incur you loss or gain.
In economics the losers obviously should be cut off quickly before they convert into something big like so called financial disaster. The company or the stock may not be the culprits in the loss but your decision might be the one. It purely depends on the timing of the thing. The trade must be studied to capture the true essence of your mistake but the specific security involved must be blocked from any sentimental attachments, allowing you to consider reinstating the position at a higher level
In order to assess the general condition with the minimal risk it is advisable to make a “test buy” in a shaky or unstable market. If the position goes the bad way, a small loss will be realized but the damages will of course be limited and the investor can recover from it emotional thing. If you follow the trend in here it will be better for the long haul. An investor should know exactly what type of environment they are trading by just watching the general market indicators, such as price, volume and daily new highs. The investor’s knowledge and judgment about the above will improve with time. The technical analysis along with confirmation of the market trend allows you to see the combined thought process of the general public and tells us if the timing is right to buy or short a specific stock, irrespective of the fundamentals.
In conclusion we must understand one important thing that the profit or loss we have will be result of the decisions we make over the period of time and according to the situation. Do not get discouraged if losses incur. Stay motivated always. The timing may be off even though the stock and research is favorable. Before you decide to do detailed study of a stock make sure you know the exact environment of the market and determine if it coincides with your objective. Being calm, wiser and smarter is the way to live in these times.
