Psychological coping strategies for handling strategies

Psychological Strategies for Coping with Losses

Psychologists have written extensively on the defence mechanisms people use to eradicate things that are unpleasant or harmful from their perceived reality. A disastrous investment is a perfect example of something anyone would want to undo or undo.
Losing a large amount of money can have a traumatic effect on people, especially if the loss impacts important life stages, such as retirement, paying for a child’s education, or buying money. a house. Many people may think that there is no return on the financial losses and then take action that makes the situation worse.
Although we, unfortunately, cannot go back, it is better to manage the process psychologically rather than trying to compensate for the losses with risky investments or other drastic measures. Studies have shown that there are positive ways to deal with such loss as well as to identify harmful methods and how to avoid them.


  • Human beings naturally try to avoid loss, and when a loss occurs it can cause psychological and emotional
  • Losses in the markets are inevitable, so loss management is the key to recovering and recovering unscathed.
  • Here we take a look at some negative and then positive ways to deal with financial loss
Dysfunctional Coping Strategies

In the face of loss, many people adopt dysfunctional coping strategies. These include:


Trying to suppress the negative feelings associated with a loss can be difficult and come back to haunt you. Financial problems and the distress induced by losses can easily turn into marital or career-related problems or stresses. You might end up blaming your frustrations on your family, coworkers, or friends.


It is not uncommon for those facing a great loss to try to blame someone or something else rather than taking responsibility for their own bad decisions or taking excessive risks.

Denial and Self-Illusion

These dysfunctional coping methods lead people to cling to failed investments in the vain hope that they “will pick up.” If you’ve bought a mess, it’s almost always better to get rid of it and put the remaining money in something safer and more solid. In short, cut your losses and move on.

Sound Coping Strategies

Assuming that you have no legitimate claims against the seller for your losses, or that you cannot afford to go to litigation, you have to accept the situation. An important way to cope is to simply learn from your mistakes and try to recoup your losses over time by investing well and prudently in the future. It’s not a quick fix or a “sure thing”, but it makes perfect sense to try.


If you’ve taken too much risk, trusted the wrong people, or just been unlucky, you can be more careful and diversify your portfolio more in the future. Even though it takes years, you may find that you get some or all of it, and it’s heartwarming to think that it can happen. Diversifying your portfolio should always be the first step in investing that will ensure a balanced portfolio that will avoid drastic losses.

Keep in mind that some investments go wrong. There are incompetent, unethical and dishonest people in the industry and anyone can fall victim to it. That’s life, and what doesn’t kill you can make you stronger.

Learning from mistakes

Rationalization is useful, but only if it is realistic. It is important to understand what you and others have done and why. false promises or even fraud?

Shedding light on what happened in the past is the best way to move towards a better future. But when rationalization is indeed an illusion and involves blaming others for mistakes or not facing reality, the process turns negative. Trying to understand why you made an investment decision can help you avoid bad investment decisions in the future.

Seek professional help

In the case of particularly severe losses, and possibly even those that do not threaten their financial survival, there are cases where people suffer from depression or even despair. As such, they may resort to the most discussed or worst negative coping strategies. In such cases, professional help may be required.

Finally, since this is a good investment for the future, it may be worthwhile to hire an independent financial advisor with a good track record.

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