STOP-LOSS SYSTEM 1

It is very obvious that we have more novice investors in the nigerian stock market than informed investors. Thus the ability to sense the signals of the bearish market or the bullish market is lacking.
The term bearish market refers to a market where the prices of stocks are dropping. And a market like the nigerian stock market is said to have a persisted bear when the drop in prices remains consistent over a period of time.
Investors that buy the stocks before the bearish market sets in will loose a lot of wealth in their stocks investment. However, it’s important to understand the term ‘bullish market’. The bullish market refers to a market in which prices of stocks are generally moving up. When investors buy into the market shortly before a strong market bullish run, great wealth is created. This is the single reason why people believe the stock market ( including the nigerian stock market) is an avenue for quick riches. But unknown to many investors, this is not a frequent or continual event as can be seen in the nigerian stock market. Seeing stocks grow continually, they will go for an aggressive drive to raise funds for massive investment, but unfortunately, they maybe coming into the market at an unfavorable peak. In no time the market glides down to a pathetic position. Leading to heart attacks and so many cases of deprression.

So how do you protect your investment from such loses. You can use a method called STOP-LOSS SYSTEM. Before we go on, it’s important to note that the basis of holding a successful wealth creation depends on stocks invested on. If you invested only in a particular sector, you will be faced with the basis of unfavourable government policies against such sector. Thus a mix of various sectors and different classes of stock can serve as a shock-absorber.

Stop-loss system.