If you're an avid reader of the Stock Gain website, you've probably read the post: Don't Rush to Cut Loss. In that post, I advise traders not to rush to make a cut loss, because a cut loss that is done too quickly can make you regret it (the price will most likely reverse up again). I can guess what readers think here if you read my post:
"Oh, it means that the cut loss is not necessary. After all, the stock price will eventually come back after it goes down." You think.
The stock price will return after it goes down. The statement is true. That is, you do not need to rush to cut loss. But if you think cut loss is unnecessary, that's very and very wrong. There have been many cases where traders finally have to surrender, hope, and can only imagine the stock price will return.
READY stock for example. When in 2014, SIAP rose from 120 to 451, many traders began to be interested in buying this stock. And you know, SIAP is not a stock with good fundamentals, and has a pretty bad track record. Thus, the stock price quickly dropped to 80 per share.
Many traders are stuck in the 280s price, and until now the shares have never been traded at all. Another example is BUMI shares. In 2008 the share price had reached 8,000. Many fellow traders are still holding their share price at 6,000-8,000. Currently, the share price has started to move but is still at 290 per share (in 2016, meaning it has been 8 years).
So, Bung Heze, can the sleeping stocks return to their original price? Ask you
The name will probably always be there. BUMI, which used to be a gocap stock, has now moved up to a price of 290. However, if a trader is stuck at the price of 6,000, how long do you want to wait? So all back again, you already know the consequences if the trader does not want to cut loss. Your capital will be 'imprisoned' and you can not use it for ANYTHING, except hoping the stock price will rise again.
That's why I always emphasize to you, to always protect your capital with a cut loss. But why do traders find it difficult and don't want to cut losses?
Because psychologically, (cut) loss means loss. Traders (you and I) definitely don't like losing. Loss is something that traders always avoid. However, in trading you are very likely to be wrong. Why could it be wrong? Because when you buy and sell stocks, everything is based on analytical science that is predictive and not exact science. Therefore, if you are wrong, you must limit the loss. The science of analysis can work well if you keep practicing.
Cut loss is a capital protection measure. If you do not protect your capital, your capital will continue to be eroded if the stock price drops. If the stock price continues to fall until it reaches the Gocap, you will not be able to sell the shares, unless you wait for the price to rise again or sell on the negotiable market (and even then if anyone is interested).
One more thing I want to say in this post, you have to do more protection if you play in fried stocks. There are so many traders who don't want to cut losses in fried stocks. In the end, their fate was stuck in the stock of SIAP, ELTY, UNSP and others, the price of which had reached Rp.
So if you ask: "Why cut loss?" This post answers your question.
