Trading Psychology, The 14 Stages of Investor Emotions![Free Technical Analysis Education Investor-stages-emotions](https://www.stocktrader.com/wp-content/uploads/2009/05/investor-stages-emotions.jpg)
1.Optimism – A positive outlook encourages us about the future, leading us to buy stocks.
2.Excitement – Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish.
3.Thrill – At this point we investors cannot believe our success and begin to comment on how smart we are.
4.Euphoria – This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable.
5.Anxiety – For the first time the market moves against us. Having never stared at unrealized losses, we tell ourselves we are long-term investors and that all our ideas will eventually work.
6.Denial – When markets have not rebounded, yet we do not know how to respond, we begin denying either that we made poor choices or that things will not improve shortly.
7.Fear – The market realities become confusing. We believe the stocks we own will never move in our favor.
8.Desperation – Not knowing how to act, we grasp at any idea that will allow us to get back to breakeven.
9.Panic – Having exhausted all ideas, we are at a loss for what to do next.
10.Capitulation – Deciding our portfolio will never increase again, we sell all our stocks to avoid any future losses.
11.Despondency – After exiting the markets we do not want to buy stocks ever again. This often marks the moment of greatest financial opportunity.
12.Depression – Not knowing how we could be so foolish, we are left trying to understand our actions.
13.Hope – Eventually we return to the realization that markets move in cycles, and we begin looking for our next opportunity.
14.Relief – Having bought a stock that turned profitable, we renew our faith that there is a future in investing.
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