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What is the index of fear and greed?

Fear and greed index (fear &; Greed index) is an index developed by CNN Money, which can be used to measure investors' emotions in the market, and the two most common emotions of investors are "greed" and "fear".

When investors are afraid of the stock market, the stock price usually falls below the general level, while when investors are greedy, the stock price tends to overshoot.

This index is different from the Standard & Poor's 500 Index, Dow Jones Index and Shanghai Composite Index, which are composed of various constituent stocks. Instead, by counting the emotional changes of investors in the stock market, seven indicators are weighted to calculate the fear and greed index, namely:

Junk bond demand

Market kinetic energy

market fluctuation

Share price width

Hedge demand

Put option and call option

Stock price intensity

What does the index stand for?

The range of fear and greed index is 0~ 100. The closer the value is to 0, the more fearful investors are. When the value is closer to 100, it means that investors in the market are more greedy.

So this data can be subdivided into five States: extreme fear, fear, neutrality, greed and extreme greed.

0-25 years old: extreme fear

26-44: Fear

45-55 years old: neutral

56-74: Greed

75- 100: Extremely greedy