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How do we use the Fear Index.
Let me explain it to you simply:
What is the Fear & Greed Index?
It is a numerical scale (from 0 to 100) used to measure investor sentiment in the market (whether in cryptocurrency or stock markets).
When the index is low (0-25): Extreme Fear ➔ People are scared, the market may be close to the bottom (often a buying opportunity).
When the index is high (75-100): Extreme Greed ➔ People are greedy, the market may be near the top (beware of overbuying).
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Important tips when using the index:
Do not rely on it alone! Use it with technical analysis and support and resistance levels.
Be contrary to emotion: When everyone is afraid, think about buying wisely. And when everyone is greedy, think about selling or being cautious.
Watch for large movements: If the index suddenly jumps from fear to greed, there may be a significant opportunity or danger ahead.
Follow it daily: It changes daily based on news and market movements.
Practical example:
Today the index is 20 (Extreme Fear):
➔ The market is in a state of fear. You may find strong coins or stocks at low prices.
Today the index is 85 (Extreme Greed):
➔ The market is inflated and may explode (strong decline coming), it's time to be cautious and take profits.