Wall Street cheat sheet

The only difference between a profitable trader and a non-profitable trader is how they control their emotions. While the latter always shows the right emotions at the wrong time (often leading to wrong calls in the market), the former understand their emotions and use them at the right time. To succeed in the market, you need to understand the psychology of the market, which is why we bring you this Wall Street cheat sheet.
The only difference between profit traders and non-profit traders is how they control their emotions . Although the latter always shows the right mood at the wrong time （ Usually leads to wrong orders in the market ）, But the former understands their emotions and uses them at the right time . To succeed in the market , You need to understand market psychology , That's why we bring you this wall street memo .

This Wall Street cheat sheet breaks down the psychology of market cycles and shows the different emotions that play out. As you know, the market moves in cycles, and these cycles repeat themselves over and over again. The cheat sheet shows what goes through the minds of market participants during the different stages of the market cycle.
This wall street memo broke the psychology of the market cycle , Showing different emotions . As you know , The market moves through the cycle , These cycles are repeated over and over again . The cheat sheet shows what market participants think at different stages of the market cycle .

Wall Street Cheat Sheet - The Robust Trader
Wall Street memo —— A steady trader

In the chart above, you can see the different emotions that play out in the market. Let’s explore them one after the other.
In the diagram above , You can see different emotions in the market . Let's explore them one by one .

Disbelief doubt

This is the usual emotion when a new trend is emerging in the market after a bear market. It probably starts with short-sellers covering their short positions. Some experienced investors might come in at that early stages, but amateurs would remain on the sidelines since they doubt whether the rally will continue (maybe based on some past experience or lack of knowledge thereof). If the rally grows into a full-blown uptrend, those doubters would either start regretting or hop on to the trend at the later stages out of fear of missing out (FOMO).
This is a common sentiment when there is a new trend in the market after a bear market . It may start with short sellers covering their short positions . Some experienced investors may enter at an early stage , But amateurs will stay on the sidelines , Because they doubt whether the rebound will continue （ May be based on some past experience or lack of relevant knowledge ）. If the rebound develops into an overall upward trend , The doubters are either beginning to regret , Or late because of fear of missing （FOMO） And enter .

Hope hope

Following the initial rally, the price reaches a moment of temporary consolidation and retracement but traders and investors believe the security has a lot of potentials. Here, we will see people who missed the first rally coming in bit by bit. This phase as seen on the chart is a period of accumulation for what’s to happen next.
After the initial rebound , The price has reached the moment of temporary consolidation and correction , But traders and investors think the market has great potential . ad locum , We will see people who missed the first rebound come in bit by bit . As shown in the figure , This stage is an accumulation period , Prepare for the next step .

Optimism optimistic

As the market momentum picks up, more and more investors rush into the market to get a piece; they are full of optimism at this point. This stage sets the pace for the boom stage as it gets media coverage.
As the market momentum picks up , More and more investors are pouring into the market to take a share ; At this point , They are full of optimism . This stage sets the pace for the boom stage , Because it has been reported by the media .

Belief and thrill Faith and passion

At this stage, the market is getting a lot of media coverage, and everyone is talking about it. This is where most people get into the market as a result of FOMO (Fear of Missing Out). This phase usually comes with a continuous rally as more and more buyers come into the market. Here investors will start recommending the asset to relatives and friends as Fear-of-Missing-Out and what seems to be a lifetime opportunity gives birth to speculations and widespread optimism. An example of this is the Gamestop frenzy and the DogeCoin (cryptocurrency) rally earlier this year (2021).
At this stage , The market has received a lot of media coverage , Everyone is talking about it . This is why most people enter the market for fear of missing out . As more and more buyers enter the market , This stage is usually accompanied by a sustained rebound . ad locum , Investors will begin to recommend the asset to relatives and friends , Because they are afraid to miss , And this seems to be a lifetime opportunity , This led to speculation and general optimism . An example of this is earlier this year （2021 year ） Of Gamestop Mania and dog money （ Cryptocurrency ） Rebound of .

Euphoria excited

This phase comes with extreme price levels, oscillator reading reaches extremes, but caution is thrown to the wind. Investors and the public will use metrics and new valuation measures to justify the continuous rally. Here the “greater fool” theory comes into play — that no matter how prices go, there will always be buyers that are willing to buy at any price.
This stage is accompanied by extreme price levels , The shock index reached the extreme , But caution has been thrown out of the sky . Investors and the public will use indicators and new valuation indicators to justify the continued rise . ad locum ,“ Big fool ” Theory began to work —— No matter how the price goes , There will always be buyers willing to buy at any price .

At the height of the internet bubble of 2000, the value of all technology stocks on the Nasdaq exchange was higher than the GDP of most countries.
stay 2000 When the Internet foam was at its worst , The value of all technology stocks on NASDAQ is higher than that of most countries GDP.

Complacency Complacent

In this phase, market momentum comes to a halt, and then comes a retracement. However, this retracement is soon followed by a slight rally giving the impression of a trend continuation.
At this stage , The market momentum has stopped , Then a callback appears . However , This kind of callback will soon have a slight rebound , Give the impression that the trend continues .
Traders still hold on to their positions while waiting for the trend to continue, thinking that it’s just a temporary retracement. What they fail to understand here is that the market has exhausted its move and is ready for a trend reversal.
Traders keep their positions while waiting for the trend to continue , Think this is just a temporary pullback . What they don't understand in this respect is , The market is exhausted , And be ready to reverse the trend .

Anxiety and Denial Anxiety and denial

In this stage, smart money starts taking profits and selling positions as they heed the warning sign that the market bubble is about to burst. But retail investors would think that the market will bounce back.
At this stage , Smart money starts taking profits and selling positions , Because they noticed the warning signal that the market foam was about to burst . But retail investors will think the market will rebound .

Panic, Capitulation, Anger, and Depression panic 、 surrender 、 Anger and depression

The last stages of the market cycle come with a lot of market decline. In this phase, the bubble is burst. Prices of securities decline faster than they had rallied. Traders and investors are faced with margin calls and a reduction in the value of their positions. Many will capitulate and liquidate their positions. What follows is anger and depression.
The last stage of the market cycle is accompanied by a large number of market declines . At this stage , Bubble burst . Securities prices are falling faster than they are rising . Traders and investors face margin calls and declining value of positions . Many will surrender and close their positions . Then there is anger and frustration .

Final words Last words

The market is made up of people and their emotions. It’s important to know the emotions driving the various stages of the market cycle so you can plan what to do ahead of time. Don’t get cut up in the game.
The market is made up of people and their emotions . It is important to understand the emotions that drive each stage of the market cycle , So you can plan ahead what to do . Don't cut leeks in the game .