FEAR and GREED are familiar feelings to everyone. Non-professional traders trade according to these emotions.
As you know, emotions only get in the way, but we can use other people's mistakes for our own purposes.
Chart To analyze emotions, let's take the indicator of FEAR and GREED. From December 2019 to February 2020, the indicator was in the zone of EXTREME FEAR. It was a time when BITCOIN, after a lot of growth, fell for a long time and people stopped believing in the good and began to be afraid.
It was in this zone that smart money began to accumulate its positions and soon the price went up strongly.
As the price moves up, people have started to believe in BITCOIN again. Just at this time, the indicator entered the zone of EXTREME GREED. Everyone started buying BITCOIN regardless of the price. People just thought that BITCOIN would grow indefinitely - greed was growing.
By the end of this zone, the price, though not immediately, began to fall. Many were closed by margin call.
People began to be afraid again. The fear was growing.
The indicator entered the zone of EXTREME FEAR, after which growth began.
I think you have understood the logic and noticed a pattern.
As you know, when fear prevails in the market, you need to buy. When greed prevails in the market, you need to sell. This is an old rule of professionals.
Professionals not only don't make their own mistakes, but also use other people's mistakes to make money. There are no emotions here, there is only calculation.
Learn to control your emotions, otherwise they will control you and you will become a victim.
And how do you deal with emotions and do you use the FEAR and GREED index?