Doing anything is a post event response, it's better to control it during the event than to prevent it beforehand.

When a sharp drop occurs, thinking about how to deal with it is already after the fact and should be considered a last resort.

First, let's talk about how to deal with the sudden drop in the bottom line:

The most important thing for individual investors after a stock market crash is to maintain a calm and rational attitude.

1. It is necessary to clarify one's thoughts and see how the current sharp decline occurred.

If the sharp decline is caused by the fear of non substantial negative news such as insufficient market confidence, and the buying price of the individual stocks you hold is not very high, then you should be brave enough to hold shares and even find opportunities to increase positions.

If the market has been skyrocketing for a long time and has accumulated a large number of profit opportunities. In this situation, if your stock makes a lot of profit, the market will start to plummet... At this point, it's best for you to sacrifice some profit and try to sell first. Because there is a lot of room for decline in the future, it is not too late to sell at the beginning of a sharp decline.

If the stocks you hold have no chance to sell due to a sharp decline, you should check whether the quality of your stocks is excellent performing. If it's a good stock, you can lie down and pretend to be dead or even find opportunities to replenish your position. If your stocks have poor performance, it's best to wait until you can sell them and find an opportunity to clear your position or switch to blue chip stocks.

In short, it is important to quickly understand the situation of the day and see what kind of news has an impact on the market.

2. Think clearly about your original intention when buying stocks.

People are prone to panic and confusion after a sharp decline. At this point, one should return to the reason for buying stocks in the first place. If the reason for buying is no longer valid or has reached the stop loss level set at the time of buying, one must sell immediately. If you were thinking about long-term investment when buying, and then you were thinking about value investing, then you should laugh and see the changes in the situation, and there is no need to rush to sell.

Moreover, the best strategy is to prevent a sharp decline before it occurs

Truly mature investors or experts are well prepared for possible sharp declines before buying.

It manifests as pre emptive measures, just like gas stations regularly keeping fire extinguishers and conducting fire drills.

The main preventive measures are:

Diversification of holdings

This can diversify or hedge risks during a sharp decline.

Strictly control positions at high market levels

When the market has exploded several times or risen for several years, it is time to withdraw some of the operating funds and put them in safety. To prevent a sharp drop in the stock market. You can even operate with only the profitable portion of the funds. All other funds have exited the market.

3. Have a mindset of profit taking

How can one become a perennial champion in the stock market.

The sage Laozi once said in the Tao Te Ching: 'Being content is not shameful, knowing the cessation is not dangerous, and it can last for a long time.'.

It means that when trading stocks, as long as you don't pursue earning the most, don't pursue selling to the top, and set profit taking, you can stand in the market for a long time.

What a simple yet profound truth! This is the last thing that those immortals in the market who pursue to sell at the highest point love to hear.

When individual investors have already made a lot of profits in the market but cannot see the direction of the market clearly, exiting the market is certainly the best choice.