As an ordinary investor who has been struggling in the air coin market for a long time, controlling emotions and avoiding getting carried away is fundamental to not being liquidated. The principle is unchanging: with positions in place, buy low and sell high — everyone understands the principle of 'being greedy when others are fearful,' but executing it is often as difficult as climbing to the sky.
If there were a tool that could roughly indicate market sentiment, many things would become much easier.
According to public information, most greed-fear indices are synthesized from dimensions such as volatility, trading volume, social media popularity, market dominance, and search trends (different models have slightly different emphases). For example, in the version I reference daily, when the index is below 25, the system prompts 'bottom area,' and above 75, it shows 'top area.' This quantification method provides me, a 'visual observer,' with an auxiliary tool, which at least helps avoid panic selling after three consecutive days of decline or chasing high prices after three consecutive days of surge.
Limitations of perception: solely relying on indices can easily overlook the characteristics of certain coins. For example, coins that have just been launched tend to be more volatile, and their greed-fear index thresholds should be more extreme than stablecoins; while tokens related to stablecoins may need to be assessed in conjunction with on-chain locked amounts. This is also the reason why I later began to pay attention to customized indices in different tracks.
Mental training: the hardest part is executing discipline. Once the index showed 'greed-fear score of 30,' I saw a daily drop of over 10% and couldn't help but increase my position too much, resulting in continued decline the next day. Always understand to 'build positions in batches and control your position well,' and make the worst predictions in advance instead of being led by short-term fluctuations.
Suggestions for using the greed-fear index
Multi-dimensional verification: it is recommended to observe both daily (short-term) and weekly (medium to long-term) index trends at the same time to avoid being misled by fluctuating markets.
Cross-validation: combine indicators such as on-chain capital flow and exchange positions. When multiple signals resonate, the winning rate is higher.
Dynamic adjustment: threshold values need to be modified in different market stages. For example, in a bear market, the 'buy signal' can be lowered from 25 to 20, while in a bull market, the opposite operation applies.
It should be noted that this index is not a universal key. It is merely an auxiliary tool; real decision-making still needs to consider the fundamentals of the coins. If you also want to try using it, it is recommended to backtest with historical data to find suitable operating points.
Regarding the calculation results of the greed-fear index below, friends can judge right or wrong based on their own feelings. I will strive to update it daily~
