What you should do if you make an investment mistake

Julie Brownlee, Fsp Invest, 11 Mar. 2015

Tags: investment mistake, mistakes, investing, invest, investment, investment strategy, handling investment mistakes,



In spite of following the best strategy, mistakes happen when you invest.

It’s an unfortunate aspect of investing.

So what should you do if you make an investment mistake?

Read on to find out how you should handle it…



Handling investment mistakes


One of the most important aspects of investing is how you handle any mistakes you make.

From each investment mistake you make, you need to learn from it and move on. And you need to have strategies in place to prevent any mistakes becoming bigger ones.

For example, whether you’re investing or trading, it makes sense to run strict stop losses. This means that you know from the outset what your losses will be and how much it will cost you if your reason for entering the position turns into a mistake.

Sometimes it happens. Things don’t work out as you think they will.


What to do when an investment goes wrong


The first thing you need to do is know when to cut your losses. Don’t start moving out your stop loss in the hope of a recovery.

If a recovery doesn’t happen, you’ll end up losing more money as a result.

And once you exit a position, don’t keep watching it to see what it does. If it eventually goes the way you initially thought it would, you’re only beating yourself up for nothing.

You have to accept that you can’t always be right in the market, Dr Steve Sjuggerud in Daily Wealth explains. Remember, you’re not in the market to be proven right, you’re in the market to make money.

Bottom line: If you make an investment mistake, make sure you cut your losses early, don’t let you emotions interfere and only look at the investment again when it’s no longer personal.

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