Trading Psychology
Fear & Greed Index
Trading Psychology — Fear & Greed Index
Markets are driven by two emotions above all others — fear and greed. When greed dominates, prices stretch beyond reason. When fear takes hold, they fall further than fundamentals justify. Knowing where the market currently sits on that emotional spectrum is one of the most powerful edges a trader can have.
Trading Psychology — Fear & Greed Index by DGT quantifies market sentiment by combining five independent signals into a single composite index — giving you a clear, continuous read on the emotional state of the market across any timeframe.
How the Index Is Built
Rather than relying on a single signal, the index synthesizes five distinct market perspectives into one weighted composite:
Price M/A Deviation measures how far price has stretched from its moving average — capturing trend extension and mean reversion pressure. When price is significantly above its average, greed is likely driving the move.
Rate of Return tracks directional momentum over the lookback period — reflecting the speed and conviction of the prevailing trend.
Money Flow applies a volume-weighted accumulation/distribution calculation — distinguishing between moves backed by genuine capital commitment and those occurring on thin participation.
VIX Pressure inverts the volatility index to reflect fear levels in the broader market — elevated volatility signals stress and uncertainty, pulling the index toward fear.
Gold Demand monitors safe-haven flows as a risk-off indicator — when gold strengthens relative to its recent level, it signals that investors are seeking protection rather than risk.
Each component carries an individually configurable weight, allowing you to emphasize the signals most relevant to your market and trading style.
Sentiment Zones
The composite index is divided into nine sentiment zones with a seamless color gradient running from deep red through neutral gray to deep green: Extreme Fear, Fear, Mild Fear, Slight Fear, Neutral, Slight Greed, Mild Greed, Greed, and Extreme Greed.
Colors transition continuously using gradient interpolation — so every point on the index has a precisely corresponding color, not just a coarse band assignment.
Display Modes
Two visualization options give flexibility for different analytical workflows. Line mode plots the index as a smooth oscillator on a separate panel, making it easy to read sentiment trends and divergences over time. Candles mode renders the actual price candles in the indicator pane, each colored by the current sentiment level — useful for keeping price action visible while reading the emotional context directly on the bars.
An optional price bar coloring mode applies the sentiment gradient to the main chart bars, allowing sentiment to be read directly from the price chart without switching views.
Interactive Legend
A color-coded legend displays all nine sentiment zones at a glance. The active zone is marked with a ◄ indicator that updates in real time as the index moves. Hovering over the active zone label reveals a rich tooltip showing current index values for both the active and reference timeframes, a full breakdown of all five component readings, and the active weight configuration — replacing the need for a separate information label entirely.
The legend can be placed on the indicator panel or overlaid directly on the price chart.
Multi-Timeframe Support
Toggle between the current chart timeframe and Daily timeframe values — useful for tracking higher-timeframe sentiment context while analyzing lower timeframe price action. Both timeframes are displayed side by side in the legend tooltip for immediate comparison.
"Buy when others are fearful, sell when others are greedy." — Warren Buffett