lMarket Cycle Psychology :
1. Optimism:
Investors start to believe the market will rise. They begin entering positions with confidence.
2. Thrill & Euphoria:
Prices rise rapidly → Confidence turns to greed.
Bull market ends here.
Most retail traders enter at this peak.
3. Denial & Fear:
Market turns, but investors hold, expecting recovery. Fear creeps in as losses mount.
4. Panic & Capitulation:
Investors sell at a loss.
Bear market deepens.
This is the emotional low.
5. Anger & Depression:
Frustration and regret dominate as the reality of losses sets in.
6. Disbelief & Hope:
Market begins recovery, but traders doubt it.
Eventually, optimism returns
Bear market ends here.
Key Lesson:
Don’t trade based on emotions.
Identify the cycle stage and think opposite of the crowd. Buy in fear, sell in euphoria.