The 4 psychological stages & how to survive a dull market

Core idea

The confidence curve of anyone learning a new trade passes through 4 stages: peak of "Mount Stupid" → valley of despair → slope of enlightenment → plateau of confidence. 90% of people get stuck in the valley — and in trading, what pushes people into the valley usually isn't losses but a prolonged, narrow-range sideways market. How to survive: change that stage's goal from "make money" to "keep money + upgrade yourself," because sideways action is a required part of every financial market, not an accident.

Details

1. The 4-stage curve (horizontal axis: knowledge & experience — vertical axis: confidence)

Stage 1 — Peak of Mount Stupid. You've learned a little new knowledge, it feels like you've found the holy grail, and you've just won a few trades → confidence shoots to the top. This is where the most dangerous behavior is born: dumping all your savings in, borrowing, getting family members to chip in capital. Why it's dangerous: at this point the knowledge has only just been received, it hasn't yet become experience; your psychology hasn't been tested through a difficult market phase.

Stage 2 — Valley of despair. The market shifts into a difficult phase (moving sideways in a small range), more stop-losses get hit → you doubt yourself, doubt your system, doubt the whole profession. 90% stop here and go looking for an "easier" field — when every field has this same valley.

Stage 3 — Slope of enlightenment. You keep training, review your mistakes, get control of your psychology and discipline: enter when there's a pattern, stay out when there isn't. The result moves from big losses → small losses → break-even → gradually profitable.

Stage 4 — Plateau of confidence. Confidence at a level similar to Stage 1, but completely different in nature: Stage-1 confidence comes from not yet grasping the difficulty; Stage-4 confidence comes from knowing where the risk is and where the profit is.

2. The five powers — a framework for getting through the valley

The teacher links the curve above to the Buddhist five powers:

1. Power of faith (Tín lực) — believing you can do this job.
2. Power of diligence (Tấn lực) — actually getting to work, training, giving it everything.
3. Power of mindfulness (Niệm lực) — when you stumble and your faith fades, reminding yourself of the right mindset, of the reason you started. This is exactly what pulls people out of the valley.
4. Power of concentration (Định lực) — staying steady, fixing whatever is wrong, over and over.
5. Power of wisdom (Tuệ lực) — the result.

People out there who lose for years aren't losing for lack of tools but for lack of the power of faith and the power of mindfulness: once belief wavers, you fall away.

3. Two kinds of sideways markets — must be told apart first

See also identifying a sideways zone and sideways vs. trend strategy.

4. Why a dull sideways market wears down psychology harder than losses do

• Not making money for weeks/months → you doubt yourself, doubt your system, feel like "I've forgotten everything I knew."
• No signal → it's easy to slip into predicting, and predicting leads to overtrading and reckless DCA-ing in.
• The whales deliberately let the market drift so the crowd gets bored and leaves. That's by design, not an accident.
• The most dangerous part is the carryover effect: if the sideways phase trains you into fear and discouragement, then when a real trend appears you still carry that fear into it and miss the whole wave. See the psychological handover switch.

5. Comparing it to running a business (a framework to stay calmer)

A clothing seller knows winter/pre-Tết revenue equals the whole rest of the year, and summer dips — they accept that pattern so it doesn't rattle them. Trading also has 3 kinds of phases: easy (a clear trend) → hard but still profitable (wide-range sideways) → unprofitable (a few-hundred-point flat range). The difficulty isn't in the market — it's in not accepting that pattern.

6. The group's edge over the systems in books

Book authors usually apply one set of signals to every market phase: if a trend earns 10 units, sideways gives back 7 → net 3. Whereas if you change your mindset/tactics by phase: trend still earns 10, sideways stays out or earns 5 → net 10–15. The one thing worth admiring in those authors is their absolute discipline and psychological steadiness through losses, because they view profit on a long-term horizon.

The valley's number: 80% stay stuck there

At the 2023 cohort's opening session, the teacher named the four stages very clearly along with a number worth remembering:

• Peak of Mount Stupid — the metaphor of the frog at the bottom of a well: knows very little but is sky-high confident, to the point of putting in everything, borrowing, and pulling in the whole extended family.
• Valley of despair / desperation — hitting the real market, confidence falls straight to the bottom. Verbatim: "80% of the crowd stay stuck here" — quitting the trade, concluding "this isn't for me," even going around saying the entire financial market is a scam.
• Slope of enlightenment — big losses → small losses → break-even → gradually profitable.
• Mastery — confident because you know where the risk and the profit are, completely different from the confidence at stage 1 (confident because you hadn't yet seen how hard it is).

Careful: Note on the figure: elsewhere in the vault it's recorded as ~90% staying stuck in the valley; in this session the teacher says 80%. Both are verbal estimates, not statistics — keep both, don't use either as a hard figure when writing.

Applied to the real 2021 → 2022–2023 stretch: the peak was when you were thinking about supercars and mansions; the bottom of the valley was when all you hoped for was to "get back to even."

The five powers: a five-link chain

The teacher borrows the Buddhist five powers and attaches them to the trade, and the important point is the cause-and-effect order — without the earlier link, the next one can't exist:

Faith (believing this is achievable because there's a correct method) → Diligence/Effort (working hard) → Mindfulness (reminding yourself of your belief every time you stumble) → Concentration (persisting in fixing things, not changing direction) → Wisdom (mastery, and only then do results follow).

Without the power of faith there can be no power of diligence — this is why belief isn't just some abstract spiritual matter but a material condition for enduring a year with no income.

Two things to watch for because they strike straight at your power of faith

1. Ads promising "easy effort, huge profit" = a scam. The teacher's exact metaphor: free cheese only sits on a mousetrap.
2. People whose complaining spreads through the group. A real case: a student who was busy, found it hard, messaged someone who was practicing properly, "how are you even managing this" → and dragged down someone who was on the right track. The brain is naturally more drawn to negative news than positive, so this spreads fast. Whoever affects the group's belief, the teacher removes them from the group outright (while still supporting them one-on-one).

Putting it into practice

Change the goal of the dull phase. Write it down: "This phase's goal is to KEEP MY MONEY, not make money. This is a defensive phase, not an offensive one." Keeping your capital through this stretch is worth just as much as making money.

Two key points for surviving (the teacher's closing points):

1. Enter when there's a pattern, skip it when there isn't.
2. Skip waves with unclear signals. Plus: manage your trades very tightly (take profit once the momentum is gone, no wishful hoping).

Daily tasks during the resting phase (this is the real "money-printing machine" — the part where you click to enter trades is only the outcome — see the iceberg of trading):

• Keep a trading journal + review each trade
• Pen, paper, and candlelight to examine your psychology
• Read books (builds patience, builds a big-picture view)
• Go running (trains your physical state, your emotions, your "winning hormone")
• Rewatch videos / review lessons

The "respect your stop-loss" exercise (use it when you notice you're clicking into trades too casually): pull out 10% of your capital in cash, take it up to the rooftop, and ask yourself whether you'd dare throw it down to the street for a stranger to pick up. A more positive version: take the amount equal to one stop-loss and give it directly to charity, so you can see that for many people that's a whole month's food. The point: reconnect the number on the screen with real money.

Future-projection exercise: picture a $10,000 account (~200 million VND). Every reckless stop-loss is more than 2 million VND gone. If you can't be disciplined at a small account size, you'll never be disciplined at a large one.

What the teacher stresses / common traps

• A sideways/accumulating market is an indispensable part of every financial market — not a malfunction to be fixed.
• Don't let the market decide your state of mind. You have to be proactive: know which phase calls for offense, which calls for defense.
• The fishing metaphor: on days the tide brings fish, go out and catch them; going out when the water's low and there are no fish just wastes effort and bait.
• The land-buying metaphor: a plot in a perfect location but currently disputed, with no deed — would you buy it? If the signal isn't clear, don't force it.
• The teacher gives his own example: some months he enters fewer than 2 trades. A student messages, "I'm stuck, I haven't been able to trade lately" — the answer is, "This month I haven't even entered 2 trades — how many have you entered?"
• Income is a consequence of your mindset, habits, character, and daily actions — not a consequence of knowledge alone. Knowledge is the car; habit is the fuel.
• Long-term warning: you may need to mentally prepare for a monthly-timeframe sideways stretch lasting 1–2 years — even harsher than a weekly-timeframe sideways stretch.

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