Fear, Greed, and Investor Sentiment - What I have learned?
Investors do not always think the same as the fact of the market at hand. Many times we reduce the cash flow though the market seems good to go and vice versa. I came to realize how much this affects stock market pricing as well as crypto. There's no alternative to learning and understanding it but the truth is, you never can predict it and can tell in advance.
A common example is the price rise during the festive period. There's a particular reason behind it but the price goes high because of the market demand. Moreover, the fear and greed index impacts a lot on investor sentiment.
For example, when I go through any marketplace, if I see a particular coin showing red candles and the compass indicating fear then I give a second thought about my holding too. Though I know that this is temporary. To be honest, I have done many waves of panic selling all because of this specific reason in the past.
However, it's true that the fear and greed index is not always false. In major marketplaces, it shows the market momentum, stock price strength, market volatility, safe haven demand, etc. So we sure can trust them. But keep in mind that they are not always true as they do the index based on large data.
What I feel is, we need to make our own index because every investor has different goals. So it's better to take a look at your standing point and decide what you need to do. Because if we flow with the fear and greed index then there's a high chance that we will lose huge money and we will be another 'no value' investor who waves around the market without a high return.
But no matter how much we research, it's hard to avoid investor sentiment. We have a crypto trading group and most of the time we do invest in projects that the majority of the group members do without digging much. For example, I also invested in dogecoin. The probability of market pull and fall depends on this as well as the facts & data, as I have found.
So it's always better to look around at what is going on in the market. Not just data but what the investors are thinking. And to do so, being part of different trading groups, reading newsletters, and keeping ourselves updated about the market situation is a must.
What do you think?
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