This is not normal. I was fine to see huge drops. Just tell myself it will recover. But the run the market has been on (and I am heavy in AI), is just crazy. It is starting to make me see things warped I believe. Anyone else experienced this, tips to stay grounded? I am up 45% in what, 6 weeks, 30% YTD.
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Write down what led you to choose those stocks and that allocation, what, if anything, woud lead you to revisit it and what you would expect to do if that happened.
Take a look back at that paper whenever you don’t feel grounded.
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But also -16% in March? Looks like a fairly volatile allocation so that seems expected (make sure risk adjusted returns are good, volatility can go either way 
)
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2 words - stop loss 
I started investing last year - in December after 10 months of actively investing I was +80%
Waited on the “Santa rally” everyone was talking about I finished the year with only +8%
Nobody got bankrupt for taking profit
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The problem is, if you don’t take profits, they disappear as you saw. But if you do, the stock price keeps going up! 
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Reminds me of STRL. I entered at 120, sold at 160, thinking how easy this is.
How do you avoid whipsawing, though? What % drop do you put the stop at? I was thinking 5%, anything smaller feels dangerous for whipsawing, anything higher feels like it can lock in meaningful losses.
Overall do people here use stop losses, and if yes then how?
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I guess you can use a trailing stop to automatically close out a position, but you risk being stopped out on volatility.
I never use stop losses, the bigger danger is crystallizing a massive loss on a temporary gap down.
e.g. you own a stock with price $1000. you set a stop loss at $970. but then the market gaps down to $500 and your stop loss triggers and you sell at $500, a few minutes later, the blip is over and the stock recovers to $950, but your stop loss locked in the loss.
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What is your long-term strategy? Passive or active?
- If active, I personally would sell and take the capital gain, as 30% YTD is a tidy profit. The biggest lesson I ever drew from active trading is that greed is your enemy.
- If passive, obviously just leave it alone and don’t even look at the temporary fluctuations.
VT and chill
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I meant more the mental side. Not investment advice.
Because I am starting to think of all the things I can do with the money, that I can lower my saving because look I am doing so incredibly well. That I might hit my number much earlier. And I feel that is not a good attitude to get. Complacency.
Not very familiar with this part of things as a passive investor.
Is it possible to have a stop loss that only triggers at exact amount (or probably more useful in practice in a given range)?
Like, if it’s within 1% of 950 (940-960), it would trigger if possible, but if not possible then it would not trigger, even if the value is below (like at 500 in your example).
Intuitively, I agree with you on this, you might want to exit automatically if possible with a small loss, but if it’s a major loss and not recovering, then it should be a manual decision to eat the loss and divest from the position.
I guess the question is how you would structure this. Let’s say you say “sell between 940-960” current price is $1000, someone his happy to buy off your for $960. Sold with $40 loss.
Maybe you can set up a sale at >$940 once price drops below $960.
As far as I understand, the issue is lack of liquidity in a crash, meaning that despite your stop loss being at an acceptable price point, lack of liquidity can mean that the order gets fulfilled at a far lower price than acceptable and you lock in a substantial loss.
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The stock market is discrete, not continuous. If the transactions go from above your order to deeply below (say because something terrible happens during the weekend), there may be no intermediate trading price for it to settle on the way. The alternatives are selling at that deep low price or having your order not execute.
I understand this, my question was, is there an easy mechanism available in brokers not to trigger the stop loss if the only liquidity is far below the threshold.
maybe a stop limit order could be a solution. Once the stop is triggered it becomes a limit order.
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Do the right thing. Cash in all or part of your gain. At the moment, you’re only virtually able to spend. It’s daydreaming.
It is the solution. The other scenario mentioned described a 50% movement after hours (from 970 to 500). Not impossible but unlikely. Or is it? I’d grab that gain.