In every business, you have the risk of losing your money at once. It is same in the case of the stock market. If you have a risk of looses all the time. You can lose your money in a single month. There are different rather loses some of these are controllable and some are uncontrollable. Loss’, which are uncontrollable, occurs due to some natural reason like changes in the world economy. We can do privations only for the controllable loses. The market is unpredictable it can change its nature any time. There is no constant situation in the market.
Most of the time you purchase stocks, which have low price and hope the price will go up in future, time and you will earn profit due to this price difference. When these prices do not go up then you face loss. It happens normally in case the case of new investors. They do not understand the market and invest in stocks. They face these loses many times and then decide to end up with this business. This is not a right way of conducting business in the stock market. There are two types of losses, which mostly affects you in the stock market.
The loss, which occurs in real cash form, called capital losses. There is compensation for that loss. You can gain a tax rebate by showing it in your income statement other than this it has no other benefit. An investor can learn a great lesson from the occurrence of thorn loss.
This is another type of loss. It less compared to capital loss because there is no monetary loss. For example, you invest $ 20,000 in the stock market in purchase on some common stocks. After waiting one year, their price does not go up even go little down to the real price. You sell these stocks at that price thinking that if the price go more down than there will more loss. You cannot consider this as a fair deal because you bound your $ 20,000 for one year and cannot earn money. If you invest the same amount in banks, you can earn interest after one-year period. Therefore, this is loss of your opportunity to earn interest on your investment.
You must search the market before investing in the stock market. You should evaluate the risk, return of other investment alternatives, and then make the investment decision. It means that you should access the nature of the stocks in which you are going to invest that whether they are productive enough to beat the other investment alternatives or not.
This is another type of loss. In this type, the stock prices go up and the investor set back and waits for more price rise. However, in many case prices do not make up even these prices go more down and the investor loss that profit. Simple way of saving yourself from these kinds of losses that you should always go for the reasonable profit, which offered, by a market do not become greedy.