Fear & Greed = Fear and greed sentiment metric

What is Fear and Greed

Fear and Greed is an investment metric that measures sentiment in the financial markets — namely the level of fear and greed among investors. It serves as an indicator of whether markets are rather pessimistic with low risk, or on the contrary overly optimistic with heightened risk.

This indicator is based on the assumption that markets are driven by investor emotions and that extreme values can signal an upcoming reversal of the trend.

How Fear and Greed is measured

• Volatility — higher volatility often indicates fear in the markets (volatility).
• Trading volume — above-average volumes during rallies signal greed; during declines, fear.
• Momentum — observing whether stock prices are significantly above or below their moving averages (momentum investing).
• Put/call option ratio — more protective (put) options indicate fear, more speculative (call) options indicate greed.
• Market breadth — how many stocks are rising versus falling.
• Bond yields — a shift toward safe-haven assets signals fear, toward risky assets signals greed.

Why Fear and Greed matters

• It helps detect extreme market emotions that can lead to irrational decisions.
• It can act as a contrarian indicator — extreme fear is often a buy signal, extreme greed a reason for caution.
• It enables better timing of entering or exiting a position.

Fear and Greed on the Stonkee platform

On Stonkee, the Fear and Greed metric is part of the analysis of super-investors as well as the overall market overview. AI evaluates whether buying or selling pressure prevails and displays this sentiment in the context of historical values.

Summary

Fear and Greed is a useful tool for monitoring market mood. It helps investors avoid emotion-driven decisions and better recognize potential market extremes.