๐ MARKET INSIGHT: WINRATE, FGI & TAKE-PROFIT PSYCHOLOGY
๐ Daily winrate data from a trading community using R:R risk management reveals a clear relationship between market sentiment (measured via the Fear & Greed Index โ FGI) and the likelihood of hitting take-profit (TP) targets. While all traders use a fixed stop-loss of 1R, their TP levels vary โ some aim for 1R, others go for 3R, 5R, or even more. As a result, winrate doesn't reflect profitability but rather the probability of reaching TP, regardless of size.
๐ When market days are grouped by sentiment, the statistics show:
๐ด Extreme Fear: Average winrate 44.33% across 15 days
๐ Fear: Average winrate 45.19% across 95 days
โช Neutral: Average winrate 44.57% across 61 days
๐ข Greed: Average winrate 44.62% across 150 days
๐ข๐ข Extreme Greed: Average winrate 42.42% across 60 days
๐ The differences may appear small, but the trend is consistent: fear-driven markets tend to yield higher TP success rates, while euphoric markets produce the lowest. This shift isnโt purely due to market conditions โ itโs also behavioral.
๐ In high-FGI conditions, traders often extend their TP targets, convinced that prices will โkeep flying.โ Ironically, these are the moments when markets tend to stall, reverse, or fake out โ leaving many trades unfinished. In contrast, during fear, TP targets are more conservative, and markets often offer clean technical reactions, improving the odds of a completed trade.
๐ง Statistically speaking, winrate doesnโt tell us whoโs making the most money โ but it does tell us how generous or stingy the market is with follow-through. When viewed through this lens, numbers reveal what sentiment often hides: the more traders expect, the less accurate they tend to become.