Understand what the Fear and Greed Index measures, why it matters, and how smart investors use it to time their entries and exits.
The Fear and Greed Index measures the emotional state of the stock market on a scale from 0 which is Extreme Fear to 100 which is Extreme Greed. It was developed by CNN Business and has become one of the most widely followed market sentiment indicators.
Warren Buffett's famous rule is to be fearful when others are greedy, and greedy when others are fearful. This is the core principle behind using the Fear and Greed Index.
Extreme Fear from 0 to 25 means markets are oversold and historically this is a good time to buy. Fear from 25 to 45 signals caution but opportunities may exist. Neutral from 45 to 55 has no strong signal. Greed from 55 to 75 means markets may be overheating. Extreme Greed from 75 to 100 means markets are overbought and you should consider taking profits.
Do not use the Fear and Greed Index alone. Combine it with technical analysis. When the index shows Extreme Fear and a stock is showing a bullish chart pattern, that is a high-conviction buying opportunity.
Our Fear and Greed page shows the current index value in real-time with historical data so you can see how sentiment has shifted over time.
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