Trade at a loss

economic-dictionary

Trading at a loss is a psychological challenge for any investor, although it is true that we must bear in mind that sooner or later this moment will come.

In turn, it is necessary to realize that as soon as an operation is carried out, this situation occurs due to the implicit cost of the operation and the spread price (difference between bid and ask price).

Getting to handle this situation is a matter of time, the more experience, the better it will take to operate at a loss. Undoubtedly, it will not be the same to have losses in a transaction or in the global position of an investment portfolio of 100 euros than of 5,000 euros, the monetary value of the loss will depend on each investor, as will their monetary management and the degree of leverage. In this way, a well-planned strategy is necessary that is clear about the moments of entry and exit in the market, as well as the financial asset on which you want to operate.

Rules of conduct when trading at a loss

There are a series of rules of action to operate at a loss. Among the most important, we can highlight the following:

  • Do not increase position or leverage.
  • Do not modify the level of protection or stop loss in order to assume more losses thinking that the market is going to turn in favor of the position.
  • In some cases, it will be better to take the loss and close the trade, otherwise the loss can be very high.
  • Minimize the impact of commissions on the operation.
  • Cover part or all of the operation or the portfolio through opposite positions or assets with negative correlation.
  • Trading assets that are not complex to analyze and in which you have experience since it can help mitigate losses due to the fact that the variables that influence their price are known in more detail.
  • Trade with a reliable broker. This point requires a thorough analysis of the broker's activity.

Tags:  Argentina administration Colombia 

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