The Middle Ground
You've figured out what good words can do to a student and what bad words can do. Now we shall fill you in on a middle ground.
The middle ground is basically a space in between the good words and the bad words to prevent a student from becoming cocky or suicidal. Students need encouragement but they also need some obstacle or something in their way. When a student writes a paper a teacher will tell them, "This is good but I think you could have added a little more of yourself into it." This tells the student that their work is good but they need to improve it and get better at what it is they are trying to write.
Students need the part where you say "good job but you could have put more of this or that into it."