Investor Cycles & Emotions

[Jonathan Ryan Owens]

You'll largely determine your ability to succeed at trading by properly evaluating market sentiment, turning off your computer and going outside. Put in your bids x% below market and walk away.

[M4v3R]

Yes, we have seen this diagram. Several times.

Btw, my personal feeling is that we are somewhere between panic and capitulation right now. We'll get a little more downside, and then there is only way - up .

[Jonathan Ryan Owens]

Yes, we have seen this diagram. Several times, thank you for posting it again as a reminder to be objective.

FTFY.

Also, you're welcome!

xD

[proudhon]

The euphoria phase is also a great financial opportunity if you can go short.

[ArsenShnurkov]

The euphoria phase is also a great financial opportunity if you can go short.

Oh, desperation and optimism are good points if you can trade volatility.

Others positions are good if you trade trends with leverage...

[teflone]

Mr Obvious is back!

Post that chart again everybody!  I missed it

[Jonathan Ryan Owens]

Mr Obvious is back!

Post that chart again everybody!  I missed it

[legitnick]

It's a viscous cycle.

[SlaveInDebt]

So if I'm thrilled right now does that make me bipolar or something 
I'll go ask Atlas.

[Raize]

The euphoria phase is also a great financial opportunity if you can go short.

Which everyone should have realized when the Mr. Bitcoin episode ran. Buy on hype, sell on news.

[SkRRJyTC]

Capitulation incoming?

[stochastic]

Capitulation incoming?

No, this is still denial that bitcoins are crashing.

[Hunterbunter]

Capitulation incoming?

No, this is still denial that bitcoins are crashing.

yeah, this is true

[Oldminer]

Capitulation incoming?

No, this is still denial that bitcoins are crashing.

 

[Mageant]

This concept has made me the most money so far.
Just by watching the emotions of people on this forum and investing accordingly.
Better than technical analysis.

That you very much.
 

[Cluster2k]

My emotion is one of regret.  Regret that I didn't double my money on the way to $7 and just sell up and stay out, waiting for a better price to buy back in.  Fortunately however bitcoin is almost back to the price where I reentered the market.  More money available now (courtesy of people who thought $7 was a screaming buy) so maybe I'll dabble in the market when it touches $3.40.

These forums are a great sentiment indicator: when people are shouting 'zomg, here comes $X (where X is current price plus $2)' it's a time to sell.  It's almost like the market knows how to punish hubris and avarice.  When everyone seems to be throwing in the towel and saying how lame bitcoin is, it's time to buy. 

[Technomage]

I have to say that this recent cycle has taught me a lot of things about trading. It seems that for the short term and mid term fundamental real world events have actually very little effect, they simply either strengthen or weaken the current momentum. We had a downward momentum and then some bad news came, which accelerated that momentum and here we are.

This cycle and the emotions people go through is so spot on that I'm pissed that I didn't see this as clearly before. I still believe fundamentals have a say in the long term picture though and that is why I'm not worried, for example the usage of the Bitcoin network has been on a strong uptrend ever since the Good Wife episode. We have already recovered to the levels of August/September in transaction counts.

Another point is that the bad news we've recently experienced are best categorized as "reverse hype", meaning that there is really nothing to them. Paxum was not crucial to Bitcoin, nor was Tradehill. No one lost their money either. Nothing significant has happened lately on the negative side of things. Excluding the pain caused by the price crash itself, I'd say there is actually more reason to be happy about the state of Bitcoin than to be unhappy about it.

Finally, I would say that we are currently somewhere between capitulation and depression. The only thing I'm pissed about is that I missed the profit opportunities of this cycle. It was an important learning process though, in the future I will not talk about fundamentals when it's a question of predicting short or mid term market behaviour. They have very little say in it.

[gewure]

The euphoria phase is also a great financial opportunity if you can go short.

NO AVATAR you have?! .O

bad sign

[HappyFunnyFoo]

This chart is meaningless if the underlying asset that you're speculating on is an inherently poor investment vehicle, cough bitcoin cough...

[SkRRJyTC]

This chart is meaningless if the underlying asset that you're speculating on is an inherently poor investment vehicle, cough bitcoin cough...

?

The chart does not describe the asset.  The chart describes the group of people.