QUESTION: Crises and drawdowns: what to do during a market crash?

During a sharp market downturn, investors often panic, so to preserve capital, it is recommended to use a strict step-by-step action plan. The first step is to objectively determine the current standing of your portfolio, recording actual losses without engaging in self-deception.

The second step is to clearly establish a success metric that will help you understand when the situation has stabilized and the market has begun to recover. The third step involves the wise selection of instruments for protection or averaging down positions, if this is provided for in your initial strategy.

At the fourth stage, a strict deadline is set for making key decisions to avoid endless waiting and emotional turmoil. The final, fifth step is the automation of regular actions, such as purchasing depreciated assets on a schedule, which eliminates the human factor from the capital management process during a crisis period.