Lesson 2: Market Cycles and Their Phases

Lesson Overview
Markets move in cycles influenced by economic activity, investor psychology, and liquidity.

What Is a Market Cycle
A market cycle is a repeating pattern of expansion and contraction in price movement.

Phases of a Market Cycle
Accumulation phase where smart money builds positions
Markup phase where prices trend upward
Distribution phase where profit-taking begins
Markdown phase where prices decline

Psychology Behind Market Cycles
Fear, greed, optimism, and panic drive cycle behavior.

Key Takeaway
Understanding cycles helps traders anticipate potential trend changes.