You invest or trade in the stock market in the hopes of earning more. You polish up your skills and know full well that emotions have no place in this field.
 |
| "dices-over-newspaper-profit" by AbsolutVision is licensed under CC0 |
However, when you are faced with a losing position. You contemplate if you are going to hold or cut your losses.
If you go in as an investor and believe that time will correct all the stock market noise (it always did historically). Cost Averaging is the perfect way of doing it.
But if you see yourself as a trader, you are better off cutting your losses than waiting for the stock market to rally.
You want to why?
This is because of the gap of the break even point.
If you want to know how it works, you can read it here (How to Calculate the Break Even Point).
If you want a glance at how much you need to gain to break even, you can go through here (You're Losing Money by Not Knowing the Break Even Point Formula).
If you want to be surprised, you can use the calculator below.
Break Even Point Calculator
(Percentage Gain and Loss)
| Instruction: Enter only the numeric value. For example, you need to enter 25 instead of 25% to calculate correctly. |
Further reading here (Percentage gain and loss).
Takeaway
Patience is a virtue if you know when and where to use it. In the same vein, having the strength to quit is also a valuable mindset/skill to have.
How many percent do you intend to lose before you say 'I quit'? Share your perspective by commenting below.
Quote
