Psychology of A Market Cycle

I’ve had the good fortune to know some of the best traders and investors of our time, and one of the many things they all have in common is an exceptional understanding of market cycles, how they work, and which cycle is currently in play.

Traders and investors can shift the odds in their favor by understanding the current state of the market. They can also be flexible about when to play aggressively and when to reduce bet size, which are two of the most important factors in successful trading.

There are three ingredients for success — aggressiveness, timing and skill — and if you have enough aggressiveness at the right time, you don’t need that much skill.

Howard Marks

As a result, it is critical that you understand the psychology of a market cycle and how market psychology influences the outcome and returns over time.