The 14 Stages of Trading Psychology

FX:EURUSD   Euro / U.S. Dollar
The content written below was not written by myself, however i thought the information would be beneficial to new traders being aware and to address the psychological aspect of trading.

The 14 Stages of Trading Psychology

1. OPTIMISM – It all starts with a hunch or a positive outlook leading us to buy or sell.

2. EXCITEMENT – Things start moving our way and we get excited. We start to anticipate and hope that a possible success story is in the making.
3. THRILL – The market continues to be favorable and we just can’t help but start to feel a little “Smart.”
At this point we have complete confidence in trading system.

4. EUPHORIA – This marks the point of maximum financial risk but also maximum financial gain. Our investments turn into quick and easy profits, so we begin to ignore the basic concept of risk and now start trading anything that we can get our hands on to make a quick buck.

5. ANXIETY – Oh no – it’s turning around! The markets start to show their first signs of taking your “hard earned” profits back. But having never seen this happen, we still remain ultra greedy and think the long-term trend is higher.

6. DENIAL – The markets don’t turn as quickly as we had hoped. There must be something wrong we think to ourselves. Our “long-term” view now shortens to a near-term hope of an improvement.

7. FEAR – Reality sets in that we are not as smart as we once thought. Instead of being confident in our trading we become confused. At this point we should get out with a small profitand move on but we don’t for some stupid reason.

8. DESPERATION – All gains have been lost at this point. We had our chance to profit and missed it. Not knowing how to act, we attempt to do anything that will bring our positions back into the black.

9. PANIC – The most emotional period by far. We are clueless and helpless. At this stage we feel like we are at the mercy of the market and have absolutely no control.

10. CAPITULATION – We have reached our breaking point and sell our positions at any price. So long as we can get out of the market to avoid bigger losses we are content.

11. DESPONDENCY – After exiting the markets we do not want to trade ever again. The markets are not for us and should be avoided like the plague. However, this rare point marks the point of maximum financial opportunity.

12. DEPRESSION – We drink, cry and/or pray. How could we have been so dumb we think to ourselves. Some start to correctly look back and analyze what went wrong. Real traders are born here, learning from past mistakes.

13. HOPE – We can still do this! Eventually we return come to the realization the market actually does have cycles. We begin to start analyzing new opportunities.

14. 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.


Very true!
Bravo, informative posts
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Thanks very much :-)
These feelings, emotional experiences this young man is referencing are because we soon learn we don't really have a clue what the heck we are doing. In the beginning we suffer from the illusion of knowledge. After we blow out our accounts it becomes painfully obvious how the markets work. We read some books. Open an account. Makes some trades. Transfer our account to our brokers account. Wash rinse and repeat. Some go on to write books on how its done. LOL. The ones we bought. Aint no secrets in those books. Those folks at those expensive schools they selling you same snake oil you found in those books.

AS to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.
The principle here is more how the exchange work and about how they go about filling orders. The methods are each of our trading styles.

Its all about the orders. When you learn that....its still the hardest thing you will ever in your life try to succeed at. If someone told you exactly how the markets worked and you still want to play....lol, something wrong with you upstairs. LOL

By god I should be in a mental ward because I love this crap.
+1 Reply
On point with the info above.
+1 Reply
Thanks very much.
+1 Reply
Thank you.
+1 Reply
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