The Psychology of Market Cycle (biz and WallStreetSilver)

[Source: Twitter, Screenshot taken and edited by me]

The market will always reward those who are patient. Not sure if you guys are familiar with the Wall Street Psychology Cheat Sheet, but that chart pretty much sums up all retail traders’ emotions. The emotions or sentiments of retail traders are very easy to read, and there are plenty of free tools available to measure market sentiment. The Crypto Fear & Greed index is one of the most well-known sentiment measurement tools in the crypto space. But it’s kinda useless as a trading indicator, in my honest opinion.

Even the experienced traders are unable to exert complete control over their feelings; after all, we are all only human. I would like to give some credit to the book “The Mental Game of Trading” by Jared Tendler, which is widely considered to be one of the best trading books that explain how to control your emotions by letting them go rather than suppressing them.

A majority of us retail traders will go through the phases of emotion described in the Wall Street Cheat Sheet. (Disbelief > Hope > Optimism > Belief > Thrill > Euphoria > Complacency > Anxiety > Denial > Panic > Capitulation > Anger > Depression > Disbelief) again and again. History will always repeat itself, which is why market cycles exist. The general public will always buy high and sell low, no matter how much investor education resources are made available.

In my humble opinion, when we reach the bottom of the market, the sentiment that reflects the emotion of “depression” is silence. The bottom should feel like a ghost town. The bottom is probably in when your favourite investment influencers have low engagement in their posts, your neighbours no longer ask you about your portfolio, and most importantly, the investment-related internet communities you joined are dying out.

Like this one:

[Source: https://4stats.io]

And this one:

[Source: https://subredditstats.com/r/Wallstreetsilver]

I’m not suggesting that the bottom is in, but I do think we’re getting there. The bear market will slowly drain the enthusiasm of retail traders and investors. Not just crypto, the silver community on Reddit experiences the same thing. You can witness the communities slowly descending into depression, and when all hope is lost, a new bull market will begin. That’s why the market will always reward those who are patient.

(All ideas expressed above are only my opinions and should not be taken as financial advice.)