The stock market is a place to make profits for all types of stock players. Both novice stock players, seasoned stock players, investors, bookies and institutions all play stocks with the aim of achieving the maximum profit. However, to make a profit of course you need capital.
You have to remember, that in addition to skill, capital is the main thing that makes stock players survive. Anyway, as long as there is capital you can still survive in trading. If you don't have capital, you can't trade. In the stock market, capital is like life.
So, when trading stocks you are not only required to have good technical analysis skills, but you also have to manage your capital. I mean, you also have to be able to manage your psychology well.
Hmm.. That's right. But how do I keep my capital from running out? ask you.
There are main ways that I recommend to you if you want to continue to survive in the market and so that your life (read: capital) does not run out.
1. You must dare to cut loss
When you buy shares, and the stock price turns out to be far from your expectations, or suddenly the company you buy is in trouble, then you must immediately cut loss.
Most traders who go bankrupt in the stock market, the main reason is because they are too late to cut losses when stock prices and the market do not match expectations. Finally, the losses that should be small become swollen and finally the capital used for trading is exhausted. Also read: Consequences if Traders Don't Want to Cut Loss and The Cause of Stock is "Stuck", Traders Don't Want to Cut Loss
2. Patiently waiting
Continuing point 1, the cut loss is necessary and must be done too quickly. But if you cut loss too quickly, it shows that you are afraid, panicked, your mind is not calm.
The stock price is volatile. There is a time to go up and there is a time to go down. If you see the stock price dropping slightly, then you immediately cut loss. Or your stock price has not gone up, you immediately sell at a loss, your capital will quickly run out.
Then, what should I do, Bung Heze? Cut loss is Wrong, no cut loss also wrong?
Want to know the answer? Read: How Much Tolerance Limit Do I Cut Stock Loss? - Part I and How Much Tolerance Limit Do I Cut Stock Loss? - Part II.
3. Do not do averaging down, unless you really understand how.
Averaging down has the potential to make you lose more, because by averaging down, you add losses to your stocks that are falling. If your stock price continues to fall, your capital will be eroded when you are averaging down. Read the post: Which Is OK: Averaging Up or Averaging Down?
4. Leave cash in your account
When you trade, do not use all your capital for trading. Always leave cash in your account, whether 10%, 20% or more of your trading capital. This will provide a more comfortable psychological sense.
Psychological calm will make your trading decisions more planned. Having cash in the account can also minimize the risk of large losses due to falling stock prices.
5. Immediately realize profit
If you have profit, do not be greedy. Immediately realize your profit (profit taking). There have been many "victims" of traders who went bankrupt because they were unable to manage their emotions. Stocks that are already profitable, still hope to continue to rise. In the end, the stock did not go up but corrected, even corrected below its purchase price. Too bad, right?
6. Capital management.
Capital management is the main thing that makes you survive in the stock market. Capital management is closely related to the trading plan you use. How to do capital management? I discuss it in the ebook. You can get the complete material here: Stock Book
Those are the six ways so that you can survive in the stock market, don't go bankrupt and don't run out of capital. You need to remember, in the stock market cash is king, cash is life. Money is not everything, but without money you cannot trade.
