Get to know the fear and greed indicators used for Stock, Forex, and Crypto Trading

Fear and greed indicator is used to measure the level of market psychology. The two main factors in trading psychology are fear and greed. This behavior is the basis for traders' decisions in buying or selling an asset.

Fear causes sudden asset sales as traders rush to liquidate their positions to avoid losses, thereby causing prices to fall.

Greed fuels a buying frenzy, pushing prices to ever higher levels as traders chase higher profits.

The Fear and Greed indicator is described with a value of 0-100. When the indicator shows a value of 0, it means the market is extremely fearful and when the fear is saturated, maybe some investors think outside the box by buying assets because the market is feared and many have sold their assets so perhaps the price has reached its lowest point or undervalued.

When the indicator shows a value of 100, meaning the market is extremely greedy, this might trigger a correction because some investors think the price is too high due to the market extremely greedy and the price might overvalued.

Traders who can recognize these emotional triggers can potentially improve their strategies by becoming more disciplined and analytical, making decisions based on data and trends rather than emotional reactions.

You can find a more detailed explanation of the Fear and Greed Index in the FXOpen blog article published on March 15 2024 with the title "Fear and Greed Indicator in Stock, Forex, and Crypto Trading"

Trading at FXOpen UK, I often use the Fear and Greed Index on Coinmarketcap as a reference. This indicator is very useful in assisting trading decisions.