Psychological Trauma is a type of damage to the psyche that occurs as a result of a severely distressing event.Psychological trauma is the unique individual experience of an event or enduring conditions, in which: The individual’s ability to integrate his/her emotional experience is overwhelmed, or The individual experiences (subjectively) a threat to life, bodily integrity, or sanity. hus, a traumatic event or situation creates psychological trauma when it overwhelms the individual’s ability to cope, and leaves that person fearing death, annihilation, mutilation, or psychosis.