Steemit Crypto Academy Contest / S18W3: Psychology and Market Cycle

Hey, dear friends, it's such an honor to participate in this week's engagement challenge once again, I must say every week the professor comes up with a uniquely special and powerful contest topic for us to engage in with our entry 🤠.

Indeed one of the most important factors to build and consider before hoping in the crypto market is your psychological strength and capability, this is because crypto trading has a lot of influence on one mindset before and after trading. Before continuing I would like to talk about the term psychology.

Psychology has to deal with one's mind power and mind capacity that is to say the way you think and the way you make decisions has to do with your psychology at every period. The truth is that if one psychology is of poor level it could cause you to lose in a crypto market numerous times.

All these different emotions and mental feelings like greedy optimism, excitement, euphoria, anxiety, denial, fear, despair, and hope have to be balanced before you can bully call yourself a successful trader, they help you make perfect and write decisions at every period so therefore they should not be underestimated or ignored by any type of trader whether you were a long-term trader or a short term trader in the crypto market.

The amazing thing is that these emotions or mental decisions can be read on the crypto market chat by any experienced trader and they could be used to take maximum advantage and profit when trading the crypto market, I will be explaining these emotions in the best way possible.

The first on the list is optimism, this is usually the first stage in the crypto market, this is usually one of the reasons the trader is attracted by the asset and wishes to invest or trade the asset. There could be so many different sources of these emotions. In some cases it could be driven by all these telegram signal groups, telling their followers to invest in a specific asset believing it will profit them.

Also, it could be driven by fundamental news saying that it will be a successful project or even fundamental news saying that the asset would be listed on famous crypto exchanges. Like Binance, bybit, Okx, etc, this was Even seen on the steem blockchain when Steem was recently listed on famous crypto exchanges sometime last month.

The Second on the list would be excitement, as we all know excitement is the feeling we get when things go right or as planned and budgeted by the traders or investors in the market. Whenever the asset that created this optimism goes as planned traders are expected to generate the psychology and emotions of excitement because of the high chance they are in profit at this moment.

The third stage which is known as euphoria, euphoria is most times also known as the pleasure feeling. This is another stage whereby the goes beyond the assumption and prediction of a specific asset over a short period, this this feeling is usually the most interesting, this feeling is gotten as a result of being surprised at the success of the asset.

Fear occurs when an asset that is going bullish all of a sudden produces two bigs where red Japanese candlesticks, this feeling is a result of users assuming that the bullish trend might have come to an end and a bearish strength is cooking up somewhere because of the candlestick seen on the chat.

Hope this feeling or psychological emotion is usually triggered when a user who is experiencing fear due to some inverse movement, all of a sudden has Faith in the asset because a green candlestick is being shown. Is psychological feeling is triggered when users believe that the bearish candlestick they saw is about to experience a retracement and the asset is beginning to continue its bullish move from where it stopped.

Despair is one of the toughest emotions among the rest of the psychological feelings he experiences while trading in the crypto market. This is where the asset begins to go bearish without any sign of retracement or reversal. In most cases, the stage trader tends to give up by selling with the loss because they don't want to lose more and they don't believe the asset would become successful again.

Looking above you could see that I have simplified everything concerning the different psychological stages and emotions through the market chart of COMP/USDT, mere looking you would understand the chat above.

On the chart, I started with the first psychological emotional trait, which we all know is the optimism stage where traders in the market join or invest in the asset because of the sort of news they have heard about the assets and hopefully they grow ratio of which they expect the asset to grow and generate their profit.

Luckily for the investors the asset compound started generating a profit by going bullish, as you can see on the chat you generated excitement and psychological and emotional traits, this is because they expected the asset to go bullishly and you know the start time they are said this as they wished or expected.

These investors thought the bullish trend would end and would have expected it to end but the asset surprised them by going higher than expected so, therefore, increasing their profit in large ratios, this price action triggered psychological emotional traits known as euphoria. This is because this movement gave the traders so much pleasure and pride more than they expected.

But after experiencing this euphoric mental emotion all of a sudden the price movement had a little bearish candlestick, this triggered the psychological-emotional trail known as anxiety. The anxiety came as a result of the little shock and unexpected movement that the trader saw earlier, these traders were anxious to know if the asset would continue its bullish trend after these bearish candlesticks or if the price was about to crash.

After experiencing this anxious feeling the trade had a little investment but after a little bit of time, it went down bearishly again, this time the trade had a lot of confidence in this asset so therefore there was less panic because the expected what happened previously to happen again so therefore the psychological-emotional trait known as denial is triggered. Although they are seeing the asset is going bearishly they are still denying believing that it will go upward after a little bit of time.

But after a while this asset still went deeper moving bearishly again, at this time the truth was already having doubts so therefore it triggered the psychological emotional trait known as fear in a trader's mind. At this stage, they don't know what to do because they are scared of placing the wrong trade. Some traders at this stage would be saying in their mind "Let's give the asset one more chance".

Now unfortunately for the traders, this asset goes deeper and keeps going deeper, at this stage, those traders saying let's give the asset one more chance had lost the confidence they built around the asset and most traders at this stage sell the asset in order not to lose everything at same time. At this stage, the psychological-emotional trait known as despair is being triggered in this trader's mind.

At this stage, most people believe the asset is about to crash but the asset surprises everyone again by picking up a little bullish trend, this trend triggers the psychological emotional traits known as hope in traders who still hold their asset. No the confidence which was lost previously is gradually being regained from the new bullish trend.

All the psychological emotions in trade could be harmful to traders who give salt thoughts and mentality, I believe solely that the first stage to become a profitable trader is to train your mindset to the way that it would make you stabilize no matter the outcome of the market that you are investing in.

One reason why psychological emotions ruin our success rate while trading is because our greed ratio is sometimes very high, and when it becomes high it affects our thinking mentality and our technical skills which way used to predict and analyze the price movement. All traders should be trained to be satisfied with any amount of profit they make from their trade, and they should also know the trade limit while trading in the crypto market to avoid experiencing overtrading.

Another reason why traders tend to permit psychological emotions to take a higher percentage in their decision-making while placing a trade is the thought of trying to regain your loss from a previous trade. One thing you should know is that never tries to regain your loss instead he tries to make a profit from your trade. This mindset saves you from a lot of failed trades.

One of the biggest reasons why psychological emotions take a better place in addition to making while trading is when we create without sufficient technical analysis and fundamental analysis which makes us look like gamblers instead of traders. As we all know this act creates a sense of insecurity around our already predicted trade, but when we trade with technical analysis, fundamental analysis, and with the help of effective stop loss and take profit, we would generate a smart and precise decision on our trade.

I'm writing out of experience, these psychological emotions would make you run into an unexpected loss, and the loss that comes with this sort of trading a usually very very big, and in the end you'll be filled with a lot of regret and had I know wishes.

FOMO (fear of missing out) or FUD (fear, uncertainty, and doubt) is a very significant incident when it comes to crypto trading. Lots of traders tend to trigger this psychologically driven action while trading, and sometimes this act of theirs leads them to unexpected loss that could be tragic. Sometimes it usually starts with the fear of missing out after hearing some amazing news about an accept, some set of traders will be so amazed by the news and jump in by investing in their set without making a concrete analysis of the asset.

On bybit application

As the name replies fear of missing out, individuals then scared of missing out on the next trending assets so therefore they jump in carelessly investing in the trending assets which could be very risky to them.

For example, since the success of NotCoin became very famous a lot of traders and individuals have been searching for projects that are similar to the Notcoin telegram game. In my locality most people continuously type of screen you know that to my tapswap and hamster which is already causing a lot of fear of missing out on emotion in society at large.

On the other hand, fear of uncertainty and doubt usually occurs when traders are not sure if the asset will succeed or be a successful project, and at this stage, most traders start participating in panic sell-offs. In most cases, people affected by this as the same traders who entered the market with the psychological impression of the fear of missing out on a project.

On the 25th of October 2023, steem asset was listed on some famous exchanges like bybit and some other exchanges but I must have forgotten. Before they listened day, there were a lot of notifications and information spreading around the world about the listing event on that day. This act gives a lot of people the impression that the price of steem would go bullish so therefore a lot of traders and investors give in to the emotions or psychology of fear of missing out on such a successful bullish trend.

As you can see in the chat above, due to fear of missing out on such an amazing opportunity a lot of traders started buying steem, and as you can see the price of steem started to build bullishly due to the buying pressure and fear of missing out in the individual's mindset. Also after the bullish trend on the final 25th day, there was another powerful bearish trend after some hours of the bullish trend.

Mere looking at the trade you will notice that the bearish trend was triggered as a result of fear of uncertainty and doubt, today everyone wanted to sell their profit because they weren't sure the price of steem would keep going bullishly. They were scared of losing the profit they must have made over a short period of time.

💚One of how a trader especially on steem blockchain, would escape the act of trading based on emotions is by trying your best to stand by any decision you have made in the past. Changing your decisions as a price move would only cause you confusion which will permit your emotions to take a better place in your decision-making instead of your brain and your technical skills.

💚Also talking about technical skills, with the help of technical skills traders would easily eliminate any psychological emotional feelings they have while trading, while using technical skills traders who are sure of their skills would automatically generate self-confidence in that trade. When the trader has self-confidence in his trade there are fewer chances that he will give room to any sort of emotional thoughts he has concerning his trade.

💚In the crypto market I will advise you to be a gambler, this is because most of these emotional psychological traits are generated in the mindset of gamblers who entered the market based on assumptions and think they will just generate profit without any technical analysis or fundamental analysis.

💚Another influential reason why emotions are psychological thoughts take a better place in the decision-making of traders is because the greed ratio is very high, some traders because they heard that the crypto market is very volatile would come into the market with just $10 and expect to make a profit of $1,000 just for me single trade. This act alone would cause them devastating and depressing emotions that might end up causing them to liquidate and panic sell off the assets they hold.

As the name implies buy red and sell green, all traders know one basic rule. This rule is that whenever there is a serious trend there are higher chances there's a reversal going bullish, this case is more familiar or famous whenever there is an overbought in the market and also an oversold in the market.

As the name replies overbought means that the traders in the market at other time were ruling the market causing more high highs in the market at that period, and the other hand sold has to do with when they sell us are in charge of the market and this bearish trend is leading the market price direction another particular period of time.

Although this this trading strategy is very famous and a very successful one at the same time it's advisable to add some powerful acting technical indicators. In my case most times I use the Bollinger band as my technical tool used in predicting and calculating the overbought and the oversold in the crypto market, I trust it because it has been very efficient and effective to me by generating something signals that are generating me mouth-watering profit.

Mere looking at the chat after a significant bullish trend which caused an overbought, we could confirm that after the price crossed their upper Bollinger Bands during the bullish run, also after the significant bearish trend that crossed the lower Bollinger band which shows us or signifies that an oversold just occurred, at both scenarios, we could all notice something, and that is price reversal after day overbought and they oversold that occurred due to price movement.

From my perspective, I believe the psychological emotions that would be triggered depend on the sort of knowledge the trader has, if the trader is fully aware of the working process of the buy red and sell green technique then I believe the trader would be experiencing they Hope psychological trait. This is because the trader would have in mind, a lot of hope that the red bearish movement will very soon move in the opposite direction which could be bullish.

But if the trader had placed the trade earlier then I believe the trader's psychological thoughts would be around Despair, this is because they must have started running into a serious loss that we all know would affect them psychologically especially if they had invested a lot of capital in that trade.

In conclusion, I know it is totally difficult to avoid psychological emotions while trading but to become a successful trader, you need to discipline yourself so hard that you start avoiding and ignoring psychological emotions that could cost you a lot of your investment in a very short period of time..

Thank you so much for going through my article remember STARRCHIS cares ❤️ 💪🏼 . I am using this opportunity to invite my friends @artist1111 @sahmie@ hamzayousafzai @stream4u @liasteem.