5) Market Mechanics
You just bought a stock and it immediately drops. It feels like parking your motorcycle and instantly getting a ticket. But don't panic — stock prices falling is completely normal, and there are many reasons behind it that you can learn.
Stock prices fall when selling pressure exceeds buying pressure. This can be caused by internal company factors (poor earnings, management scandals) or external factors (global sentiment, interest rate hikes, geopolitics).
Stock prices are like durian prices at the market. During durian season, supply is abundant and prices drop. If news breaks about pesticide contamination, people fear buying and prices plunge further. But if 'Montong durian, best in Indonesia' suddenly goes viral, people rush to buy and prices soar. Stocks work the same way — supply, demand, and buyer mood drive prices.
GOTO's stock dropped sharply after its IPO as investors were disappointed by mounting losses. BREN once fell steeply in a single day on negative valuation sentiment. And when the Fed raised interest rates in 2022-2023, nearly the entire IDX Composite was pressured as foreign investors exited emerging markets.
After understanding this concept, apply it in tools so decisions become more objective and measurable.
Open Profit / Loss CalculatorWill every stock that drops eventually recover?
No. Many stocks decline and never return to their previous price. Shares of bankrupt companies can go to zero. That's why understanding fundamentals is essential — don't just hope 'it'll come back'. Focus on business quality, not past prices.
Should I always cut losses when a stock drops?
Not always. If you're a long-term investor and the company's fundamentals are still strong, a temporary dip can be a chance to add. But if you're a short-term trader, cutting losses is mandatory. The key: have a plan before you buy.
