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5 Smart Ways To Handle A Market Crash

Publish Date: June 11, 2019

By: Sandhya Kannan, Head – Content

The share market is a volatile place. One moment, it touches record highs. Soon after, you may find the market is down and there is panic everywhere. While stock market drops are inevitable, it is near impossible to predict the time, nature, and magnitude of future dips. But that does not mean you cannot prepare for a market crash or reap benefits even amid the chaos.

Here are some tips to help you cope in the event of a market crash:

  • Be realistic

    Stock market downturns are unavoidable. They may be influenced by socio-economic factors that spring out of nowhere. So, it’s useful to have a realistic outlook when investing in shares.

    Tip: Diversify your investments to spread the risk during a market crash.

  • Related : How to identify stock market trends

  • Avoid impulsive decisions

    A plunging market may evoke emotional decisions from investors. But it’s important to keep calm. After all, a market fall is only a temporary setback.

    Tip: Avoid short-term thinking and gather expert opinions in a market downturn.

  • Related :5 psychology traps investors need to avoid

  • Remain invested

    Market crashes are part and parcel of a trader’s life. If you follow the share market live, you will see frequent daily dips throughout the financial year. So, give your stocks time to recover.

    Tip: Buy shares of reputed companies. Bad investments struggle to recover from market drops.

  • Shop when it drops

    Rather than sell stocks when the share market drops, shop for good investment deals. You can find potentially rewarding opportunities at reduced prices.

    Tip: Maintain a list of stocks you would like to own. A major decline could be an opportunity to buy these stocks at a bargain.

  • Related : 10 ways to make a profit in a bear market

  • Don’t be greedy

    Don’t fall prey to greed when buying stocks during a market crash. Cheap stocks do not equal good investments. Avoid buying shares of companies that have huge debt burdens or regulatory problems.

    Tip: Choose low-priced stocks with good fundamentals rather than cheaper stocks with bad reputations.

Summing up

Market crashes are a part of life. But the stock market often rebounds faster than people realise. Be patient and stay invested. As long as you have chosen good stocks, you have nothing to worry about.

Besides, the right trading account can ease your stock market experience. Explore our range of account options here..

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