An illustration as to how quickly our emotions change with respect to the market movement has been explained with the help of NIFTY’s weekly chart.
It is the hopefulness and confidence about the future or the success of something. We step in the markets and have the hope and confidence of succeeding against all odds.
Excitement drives in when the market moves in the direction we hoped. Excitement also brings motivation for future endeavors.
When the momentum carries on, the gains that we’ve made give us thrill and we further expect higher returns.
As the cycle tops, there comes the state of utmost satisfaction where we start to believe that we made smart moves and the same will continue without realizing the uncertain nature of the markets. We tend to fool ourselves by now playing beyond our appetite. At this point, the financial risk is at it maximum, like the possible financial gain.
When the market turns, we watch intently for a favorable move so as to save ourselves from being a victim of loss.
As the market continues to plunge, anxiety sets in. We see our investment values declining and this is the first time that you experience the market going against you. You now hold onto the investment as you don’t want to book losses and here in, you see yourself as a long term investor.
When the losses accelerate, fear kicks in. At this point, we might even pick riskier choices to recover our losses.
The reality of the bear market makes us depressed and question our conscience about the moves we made. We become desperate to overcome it.
Having no idea of what to do next and thinking that we had a chance to book our profits makes us panic-stricken and at this point, we might make unusual decisions that may cause further damage.
Understanding that the market isn’t predictable, we feel helpless and dump our investments.
Having booked losses, We now reflect the choices we made and wonder whether we should have invested in the first place? We now have low spirit and confidence and this is the point when we miss out great financial opportunities. Hence, It is the point of Maximum financial opportunity.
As the market starts making higher lows and higher highs, We’re in doubt and stay cautious to outlook if the trend will last.
The uptrend remains intact, we might feel reluctant to re-invest but looking at the attractive scope , We hope to make gains.
The market now seems to be recovering. For the ones who let their emotions take control, the cycle might again begin.
Thank you for your valuable contribution to the TradingView community and keep up the good work!
Read in traderji forum, posted by Tradersaint under the title Trading with the flow