Let’s face it. Trading involves a lot of emotions. When it involves money, everything is emotional. That is no wonder why charts and patterns repeat always. And history repeat itself. People always think that, this time it’s different. How different is it actually? Not really.
How market cycles always work and will always work, is due to human emotions. Believe it or not, even if you are saying you do not trade with emotions, you are actually in denial. Everybody cares when their entire life savings is on the line. Everyone cares even when people say they are only putting money that they can afford to lose. It always revolves around emotions.
Whenever there is a bull run – the herd mentality
Whenever the stock price is rising, people get excited and fear of missing out (FOMO), therefore they will buy when the price is increasing. And people feel that is the right decision and will dump their savings and feel dumb if they do not take out loans to buy a rising stock. However, little did they know that smart money is starting to dump their stocks. Smart money with huge amounts of money can influence the media. They will share “good news” in the media so that everyone will want a piece of the action. But when the enthusiasm is diminished, the stock price plunge. That starts the end of the bull market.
In a bull market, people will feel that they are smart, able to double their money in a short amount of time. Some people even start to think of retirement, all the money that they have accumulated, when they can quit their job.
Denial and Hope
After taking huge loans, people will keep holding on to the stock, in hopes that it’s only temporary and it will rebound soon after this. Whenever a stock dips a little, some even take out more and more loan, thinking that it’s a good deal as the stock price will surely go up again.
However, the stock continues its downward pressure as the smart money is still selling.
Soon, emotions take over. Then there is denial, pessimism, panic and then capitulation. The general public will feel how stupid they were to invest everything and take on margin to buy a stock. They regret and feel dumb. Everybody sells during this period.
That’s the time when it’s a sale for smart money. Smart investors will grab these cheap stocks on discount from weak hands.
Ending of the bear market
Right after the weak hands have sold their stocks, price will rebound from buying by smart investors.
Soon, there will be hope, relief then optimism.
Here goes another bubble, and the cycle repeats.
Trading – It’s not easy, Learn more about yourself and your emotions
Let’s face it. Everything is not easy in life. Trading affects everyone. It require a high mental attitude and discipline. It involves a lot of patience. A market can take a very long time, even a decade or more to bull. And it can take only a few seconds to tank into bear territories. It is extremely stressful, and it will affect everyone around you.
You may or may not notice, but it will definitely affect your emotions. Whenever a stock rises in price, you will feel confident, happier, and nothing can stop you. And whenever a stock falls, you feel that you are stupid, life is not worth living, and the most depressing moment in your life will occur.
It’s not easy to control ones emotions when trading the stocks market. And it takes lots of time and patience to learn about a market. There is no easy way in life. There is no overnight millionaire or success that comes easily. It’s always the behind-the-scenes of people enduring despair, patience and hope that many do not see. People only notice the successes, but do not notice the hardship and hard work.
Trading & Life
Trading is stressful. People feed all sorts of ideas into their own minds when a stock bulls or bears. Always remember to never lose yourself. A stock price is not a valuation of you. A stock price increasing in price does not mean that you are smart and a stock that is falling does not mean that you are a failure.
Always remember that there is a second chance and third and so on. There will be plenty of opportunities in life, if only you are patient and learn from your mistakes. It’s not going to be easy, but will it be worth while? Only you can decide by yourself.
Full of opportunities
In life, there is plenty of opportunities, if only you can stop and open yourself to view them. It’s no use fooling yourself that the world is falling down and everyone is against you. Cycles occur, and like it or not, history do repeat itself. Everyone thinks that, this time it’s different, but is it really so?
Always remember to be humble in life
In life, there are ups and downs. When you have acquired a fortune, always remember to be humble. Do not overspend and waste on unnecessary splurges. Always remember to keep some money for a rainy day, you might never know when the day will come. And fortunes can overturn in a matter of days.
It may take a decade to accumulate and only a single day to lose it all if you are not careful. Whenever you feel that you have accumulated quite a fortune, always consider to diversity. Diversifying is one of the ways to preserve your fortune and reduce your risks.
Do not despair
Always believe in yourself. Believe and have faith. Have the patience to endure a loss. It’s not really the end of the world. We can choose in our lives. Life is like a game, in which everyone plays. Everyone is born and live to work to accumulate wealth and then dies. It’s not the destination but it’s the journey that matters. In the end, what do you really live for? Money, health, famous or happiness? Whatever we do, always remember that we always have a second chance and we can always start all over again. Be humble. Life is worth living.