5 big mistakes to avoid in a falling share market

Markets fall and markets rise. Some people say the best thing to do is not to buy or sell for years. However, if you are a share market investor like us, it's often impossible not to be thinking about your portfolio. There are plenty of opportunities to make money when the share market is rising, but it's a whole different ballgame when it's falling. The trouble with falling stock markets is that it triggers fear and greed. Greed can make you buy stocks at high prices and then sell at low prices after markets have fallen.  

Trading stocks and shares can either be a fun hobby or a full-time career. It's a financial market, which means it can move up and down quickly over short periods. This high volatility can scare some investors away from trading stocks. However, if you have commitment and patience, then there are a few share market tips that will help you become successful in stock trading. Keep reading to discover the 5 big mistakes to avoid in a falling stock market.

  1. Not Understanding the Investment:

When most investors get into the share market for the first time, they are understandably cautious. After all, it's not the cheapest place to put money that could be earning interest somewhere else. In general, people tend to over analyzethings and get carried away with them. 

So, what investors need to know is that, with stocks, information and access to share market investment tips is vital. When investing for the long term, it can be hard to watch your hard earned money decline in value. The key is not letting this get you down—take time to understand what is causing the decline.

  1. Lack of patience

Lack of patience is one of the biggest mistakes you could make in the stock market. Far too many traders think they will make quick profits by trading shares, but it just doesn't work like that. You can't expect to be able to call the fluctuations in a day, let alone a week. 

Even best stock advisor in india are finding it hard to spot these trends now. Instead, one should invest in companies that they have faith in to last over the long term. With stocks of companies with good dividend yields, you may even be able to retire earlier than you thought.

  1. Failing to Diversify

No matter how well your shares are performing, you could still be losing out in the long run. One way to ensure this doesn't happen is to diversify. Experienced investors, day traders, and pack rats will tell you diversification is the greatest thing to happen to investment, ever.

Having your money in one big company is risky, no matter how big the company is. That's why you should put your money across different industries. Perhaps you should consider some of the tips below so that if a market crash does happen, you're protected.

  1. Falling for confirmation bias

The share market has been on a downward spiral for a few months now. It's easy to panic with the media and your friends echoing the doom and gloom. Shares are falling, and you're panicking. You're constantly checking the share market, watching it drop further and further each day. It's a full-blown share market crisis, and you feel like you should do something about it. However, not knowing where to start can stop us in our tracks. This confusion can lead to what's called a confirmation bias, a cognitive bias that follows the pattern of interpreting new evidence as confirmation of one's existing beliefs or theories. 

Therefore, instead of finding out the truth, we become even more entrenched in our preconceived notions that the share market will recover—mainly because we want to believe it will. However, there are plenty of ways to avoid falling into a confirmation bias and make sure you make rational decisions when investing in shares.

  1. Altering your financial plan

Altering your financial plan should be undertaken with a great deal of caution, and if you do change your objectives, it is important to understand the implications of these changes so that you can protect your assets. The consequences may be more severe than you imagine. 

In the event if  you have been investing for quite a while, probably the last decade, chances are fairly high that you will have observed both large positive swings within your portfolio and also the share market moving downwards instead of upwards.


At the end of the day, there is not much strategy to share trading that you don't already know. The real trick is capitalising on market trends and adjusting your strategy when it suits. And finally, holding on through the tumultuous times when everyone else is sweating bullets will put you in a better position than the majority of other investors.It's important to remember that "one dollar down" does not imply "all dollars down!"

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