What is the index of Fear and Greed in analysis
What is the index of Fear and Greed in analysis
the output of the fear and greed index of digital currencies is a number between 1 and 100 the number one indicates extreme fear and high sales pressure And on the other hand the number 100 is a symbol of extreme greed and high buying pressure in the market.
You can use this index in the most basic state،derived a general Rule:whenever this indicator shows the number one, it is buying opportunity; because the extreme fear index actually means the fear of users to Buy digital currencies As a Result, by holding the hands of the buyers, the price went down and with oversold the asset price goes down a lot. As the famous billionaire Warren Buffet once said when the street is full of Blood its time Buy .(when everyone is afraid you Buy)
On the other hand when the indicator number 100 as a sign of greed shows, it is usually interpreted as a sell signal.
The rush of people to enter a market attractive at any price the greed index has reached its highest level and the prices are usually very high during these times. Buyers want to reach us at such time! You remember the greed of investors in the meme coin market last year?it is at this time that at any moment there is a possibility of price reversal and sharply or sudden drop. To put it more simply when the index of Fear and Greed this, it indicates a possible price increase And when this indicator displays high numbers, it is a signal a possible decrease in the price of digital currencies.
Benefits of Fear and Greed?
This index is a reliable indicator of investors feelings and emotions and it is very useful in times of price bubble in the market. For example the DOTCOM bubble was a direct result of investors greed to aquire internet stocks *using this indicator more profitable trades can be made and when the market became dangerous got out of it.
Whenever the trader wants, the crypto fear and greed indicator detemincy the state of market sentiment And you can easily find the entry and exit point. With the fear and greed index you can understand that a stock or digital currency has a price lower or higher than its real value.
disadvantages of Fear and Greed?
This indicator service more as an indicator for timing the market and it cannot be counted as part of the invest went research process* the Fear and greed identified in the index can encourage investors to enter or exit the digital currency market incorrectly and cause the losses.
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