Lessons That Bear Market 2020 Taught Me


( This is a Guest Post by my friend - Shabbir Hussain )

I am a novice in the market, so I want to share you some of my learnings to you.

I lost all the money that I had made in the previous Bull Run, but due to god’s mercy my capital was protected. I never used to put stops, just rode the run without calculating any risk.

And for every one of you who are reading this “even a fool can learn from his own mistakes but a wise will even learn from others mistakes”.

I learned the following things in this market

1)    Position sizing

a.     Never take more than 1% risk or allocate only 5% of capital in a stock.

b.     It saves you from most of the uncertainties.

c.     You can always have a peaceful sleep as your risk is defined

d.    You won’t have an urge to book profits or losses early

2)    No matter how the market is always have some cash on hand.

3)    Always cut the losses mercilessly (cutting short losses are better than bearing big losses which corrode your capital).

4)    Capital protection is most important in capital market.

5)    Set alerts and sit back, avoid making more and more decisions.

6)    Momentum to momentum will never lead to wealth, retracements are a part of the game.

7)    Avoid ego, anger, greed and fear.

8)    Be a trend follower

9)    See P&L at the last date of the month only

10) Have trust on god, and don’t expect more, if you do this then if you are in loss you won’t regret more and if you are in profits you will be more happy and grateful.

11) And at last, always book out some profits timely and enjoy the money.

Though my profits are gone but these lessons are far more valuable than the cost I paid, I am too grateful for that..