How investors lose money when the stock markets crash?

At the point when an emergency hits the world then the economy will influenced vigorously and the financial markets will be on the verge of crashing. At the point when they do so financial specialists lose cash deliberately or automatically and a ton of them will be left bankrupt, in obligations and less fortunate.

How do they lose voluntarily?

When they are holding their positions they might wait a little bit longer before they liquidate expecting are bound. When the stock continue sinking they will then chose to cut their losses by selling their positions at a lesser price than the one they acquired at.

But when the market fall they will reach a certain point where they will rebound that’s when those who are rich buy all those position being liquidated, so in times of crises the majority lose money and only the minority make money.

How do they lose involuntarily?

When playing chess the objective is to checkmate your rival, so similarly as with the stock merchants they will likely checkmate the financial specialists. The speculative stock investments and stock representatives intend to bring in cash whether the common individuals or non military personnel lose all they care about are their profits.

Buying crap stocks – When the market is bleeding the trading analysts and hedge funds offload their worthless stocks by persuading the investors to buy them, so the investors will lose money and the hedge funds and stock brokers make money. So in this case the investors lose money involuntarily, they bought what they thought was worth something not knowing they are sinking in losses.

Buying crap stocks

Margin call – investors and traders can trade using leveraged and marginal accounts e.g. let’s say you deposit $100 and you opt for a leverage of 1:100 that means with just $100 you will be able to trade positions of $10 000 and your profit level increase so as your risk. When the unexpected happen you will lose everything you have and you might even be left with a negative balance with margin call. That’s an involuntary lose.

margin call

So here is what you should do to avoid voluntary and involuntary loses:

  •  Don't close you positions in lose till the market bounce back
  •  Don't buy stocks when the market is as yet going down
  •  Don't over leverage your exchanging account
  •  Lastly remain safe.

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