Today we’re discussing The 14 Stages of Trading Psychology? I had mentioned the actual emotions which are happening Practically while trading.
- OPTIMISM: It all starts with a hunch or positive outlook that leads us to buy a stock.
- EXCITEMENT: Things start going our way and we feel dizzy inside. We begin to anticipate and hope that a potential success story is in the making.
- THRILL: The market continues to adapt and we just can’t help but start to feel a little “smarter”. At this point we have full confidence in our trading system.
- EUPHORIA: This marks the point of maximum financial risk but also maximum financial gain. As our investments turn into quick and easy profits, we begin to ignore the basic concept of risk. We now start trading anything we can earn money on.
- ANXIETY: Oh no – it turns around! The markets begin to show their first signs of taking back your “hard earned” gains. But despite never seeing this happen, we’re still incredibly greedy and think the long-term trend is higher.
- DENIAL: Markets are not rebounding as quickly as we had hoped. Something we think to ourselves must be wrong. Our “long-term” outlook now dwarfs near-term hopes for a correction.
- FEAR: Reality shows that we are not as smart as we once thought. Instead of being confident in our trade, we get confused. At this point we should get out with a small profit and move on but we don’t for some stupid reason.
- DESPERATION: At this point all benefits are lost. We had our chance to profit and missed it. Not knowing how to act, we try to do anything that will bring our situation back into the black.
- PANIC: Most emotional period ever. We are ignorant and helpless. At this stage we feel that we are at the mercy of the market and have no control over us.
- CAPITULATION: We have reached our breaking point and sell our positions at any price. As long as we can exit the market to avoid big losses, we are satisfied.
- DESPODENCY: After exiting the markets we never want to buy shares again. Markets are not for us and should be avoided like the plague. However, this rarefied point marks the point of maximum financial opportunity.
- DEPRESSION: We drink, cry and/or pray. How can we be so dumb we think to ourselves. Some properly begin to look back and analyze what went wrong. Real traders are born here, learning from past mistakes.
- HOPE: We can still do this! Ultimately we come back to the realization that the market actually has cycles (shocker). We start analyzing new opportunities.
- RELIEF: The markets are turning positive again and we see our prior investment come back around. We regain our faith (although small) in our ability to invest our money. The cycle start all over again!
