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How to Survive a Stock Market Crash?

Mr. Avinash | Posted On Saturday, December 04,2010, 02:34 PM

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How to Survive a Stock Market Crash?



How to Survive a Stock Market Crash?

A stock market crash is defined as a sharp plunge in stock price of equities listed on the stock market. Similarly with various economic factors, is one of the reasons for crash in stock market, And also due to panic and investors loss their confidence. Often, stock market crashes end speculative economic bubbles.

In stock market there will be ups and downs so always we have to prepare to face the reality. "After rain comes sunshine"? As the proverb indicates, the sun will always come once rain stops, just like the weather, the stock market also goes through cycles. You can never estimate when you are going to earn huge income or incur losses in the Indian stock market.

See Also: Stock Market In India

There are few strategies that can be taken advantage of after a stock market crash is :

  • Stock market crash loss reduction

  • Stop Loss Orders

  • Diversification

  • Stay Informed

  • Don't overly invest in risky stocks

Stock market crash loss reduction

Reducing loss in the event of a stock market crash is essential when surviving a stock market crash as this is to allow an investor to financially see another day. Age based investing is a factor to consider overall.

Stop Loss Orders

An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor's loss on a security position.


Diversification means reducing risk by investing in a variety of assets. Real estate, Treasury Bonds, Certificates of Deposit and regular checking accounts are all safe places to put money.

Stay Informed

Being knowledge of World events, economic trends and sector performance will help to predict potential declines or even crashes in the stock market. However, it is not always possible to know with absolute certainty what will happen.

Don't overly invest in risky stocks

Simply not to invest in one stock at all, but rather Bonds or Commodities i.e. By not investing, or investing conservatively, one may earn a lower yield but may also be assured the investment is safer and more secure during times of market volatility.

Be Patient When Investing In Stocks

You should decide first whether you wish to go for long-term investment or short-term investment. If you decided to go for short term then you can go for day trading. According to many investors this is very risky trading. But it is not correct, When it comes to investing in the stock market, you should never be impatient if you concentrate on short-term goals then you can for day trading, but never be impatient.

Day Trading Rules

Anyone can become a day trader but not everyone can make money out of it. Day trading is suitable for only those who wish to speculate on the stock market. Generally day traders say that day trading not only gives you the opportunity to make money, but also to lose. No matter whether you are a full time employee or part time employee, you can trade in stocks and enjoy the benefit. Stock market provides you an opportunity to use your knowledge of every-day events and convert them into profits.

See Also: How To Invest In Stock Market?

Following techniques will help you to become a successful intraday trader;

  • Fix a target price

  • Always fix Stop Loss

  • Wait, Watch and Trade

  • Don’t expect too much

  • Confirm the buying & selling volumes

Fix a target price

Always fix a target price while trading. If you don’t have a target price, the greediness will make you to lose the entire capital in the stock market. Stock market is a place where it can swing to any side. So you should be careful if you feel that the price will increase further but in the very next moment it may fall down drastically.

Always fix Stop Loss

It is very important to maintain a stop loss while trading. This will help you to minimize the loss if the stock price is going critical direction. Assume that the share you purchased falls down drastically, in this case you may end up with huge loss. But stop loss will help you to restrict your loss to a certain limit.

Wait, Watch and Trade

Do not rush into the market without a proper analysis. Wait, watch and trade. Watch the market path and place the order because most of the stocks tips will not work if market direction changes. Confirm all your strategies like resistance and support levels and then start trading.

Don’t expect too much

More expectation will end up with losing all your money. So don’t expect too much in stock market, try to be happy with whatever profit you make because you are doing day trading so square off your positions with appropriate profit instead of waiting for big profit. If you try to grab too much from market, the market will grab all your money.

Confirm the buying & selling volumes

Before buying a stock check out the buying and selling volumes. If buying volume is increasing then the stock may go up and if the selling volume is increasing the stock price may come down.

Go For Stock Consultant

Stock market is a very risky place for a fresher lack of knowledge is very dangerous and it will make you to lose huge money. It is always better to do trading or investing by taking the advice and suggestions of an expert who has proper knowledge about the market. is providing accurate trading calls for its subscribers.

Never Panic

Don’t allow sentiments to rule you. If that is the case you are going to lose all your money in the market. During the day market might go up and dawn but don’t change your decisions continuously. Have a clear plan about the day and start trading.

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