Ways to Deal with Stock Market Fear

Why wouldn’t people be worried about the stock market? But how can investors put their faith in the market cycle and ride it out, given all the unknowns and expected volatility? And especially when our wealth is at stake! Who wants to lose, after all?

Stock market crashes in the past have caused people to lose millions of rupees. So when first considering the stock market investment, most people act with some degree of fear. One of the main things worrying them, and one of the biggest things holding most traders or investors back, is the possibility of incurring a monetary loss.

For novice traders & investors, concerns about the market and the potential for loss are real and natural. Traders & Investors of all levels feel fear at some point. Situations beyond our control lead people to make poor choices, act impulsively, and suffer financial losses. When you first start trading or investing, you’re entering uncharted territory. As a result, most traders and investors often withdraw their money in panic and fear when the stock market drops, compounding their losses. It’s a never-ending cycle.

Tips to Deal with Fear in the Stock Market

Keep Crowd Bias at Bay: It has to be your first and foremost step. Do not listen to the crowd bias; half the things are sorted. It is like the similarities between the stock market and the government. Everyone has an opinion about their position or level of expertise.

When discussing the stock market, people frequently assume they are experts when they are not. Within a corporate office, there are a variety of rumors that circulate. Some of them may have even started with one person’s opinion. Don’t mindlessly conform to such beliefs. It’s crucial to conduct market research for your portfolio.

First, learn how to invest in the stock market for a better understanding. The Thought Tree is a stock market institute in Jaipur with expert faculty members. They can guide you in the right direction. 

Keep in mind the wise words of the brilliant investor: “Be greedy when others are scared and fearful when others are greedy.” Warren Buffet.

Take a Broad Perspective: If you want to learn to deal with fear, reconsider your objectives and efforts to accomplish them before developing a fear or taking a step back. While concentrating on what you have to gain, consider what you have to lose. Most people find that trading and investing is a marathon, not a race.

Determine how much you can invest after looking at your financial condition. If the stock market crashes, you don’t want to lose everything; therefore, figure out how much your income may be spent. Don’t invest more than you can afford to lose is a wise maxim. This way, you’ll not be afraid of the stock market crash. The fear of losing money will be dealt with.

Ignore Fears and have Faith in the Future: Purchase stocks, take sleeping medications, and give up reading the newspaper. You’ll discover your wealth many years from now. It’s the ideology of legendary investor André Kostolany, and the foundation of the ignore approach is based on having faith in the long term.

Although there are a few exceptions, on average, stockholders made 6%–7% in real terms per year. So why stress if everything will work out in the end? Financial markets offer liquidity and value whenever they are open, which is a wonderful characteristic.

However, this creates a significant issue for us as humans since it allows us to track changes in the net value of our money in real-time and to the very last cent, which becomes extremely stressful when prices fall.

When markets crash, one of our seasoned investors told me his trick for handling the situation: “Switch off the computer and go for a walk!” It’s a time-tested method of ignoring worry.

Note: This doesn’t mean you have to invest without thinking about anything. It means that once you have invested, don’t overthink it. Otherwise, it’ll unnecessarily develop fear and affect future investments.

Take the Easy Way Out: You should stick to simple trading strategies. The overly complicated methods often cause more stress and work than their less intricate counterparts without providing any real benefit.

Taking a no-nonsense approach to trade or invest helps you avoid getting lost in the shuffle and making costly blunders. Using an easy method, you can have some financial and material freedom without getting fearful.

The complexity increases as the complexity of the implementation increases. However, you can adjust if you find a problem with one of your assets. The following are some examples of potential changes you may want to consider making:

  • The value of the stocks you buy and sell can fluctuate.
  • Shares are of and for different amounts.
  • Altering your grip to fit the situation.
  • Adapt your criteria for choosing investments.
  • The fields of investment that are developing.

Calculate the Level of Risk: Taking calculated risks indicates a healthy risk appetite. The answer to this question varies considerably depending on where you are in life.

When you’re young and carefree, you don’t have to worry about supporting a family or paying your mortgage. However, as we age, we take on additional responsibilities. The FEAR while trading or investing rises as one gets older because of their reduced tolerance for risk.

Before making a financial commitment, you should evaluate the product’s risk model and see if it suits you. Of course, there is no guarantee of profit in the markets, but careful & skillful traders and investors reap large gains.

Conclusion: Trading and Investing in the stock market is daunting because of the massive risks involved. However, you’ll emerge unscathed if you can keep your cool, learn to make sound judgments, and employ the tactics discussed in this post.

Successful traders and investors amass vast fortunes by consistently making sound decisions under pressure. If you constantly worry about the stock market, how can you be sure you aren’t one of them? So stop putting it off and start doing it now to see the results.

About the author

Divesh Jotwani is a full-time trader in the Indian stock market. He has spent over 20+ years researching and discovering WD Gann's methods and applying them day in and out markets.