When plotted below the daily chart of the S&P500 index, the daily CNN Fear & Greed Index (FGI) is not very useful in highlighting trading signals, as noise makes the FGI trend on a daily scale a bit erratic. In this article, I described how the daily CNN’s Fear & Greed Index can be calculated in four different timeframes – daily, weekly, monthly and quarterly, and plotted under the S&P500 index in Tradestation. As described, a longer time frame such as the weekly helps highlight market tops. (click to enlarge) The Composite FGI (FGIC), is obtained by assembling the four FGI timeframes into a single indicator. I plot FGIC below…
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The Signals of Fear & Greed Index
About a year ago I went looking for the historical data on the Fear-Greed index (FGI) which was created and is being updated daily by CNN. The company ignores requests for their historical data. Looking for it online I saw forums of university researchers (not necessarily traders) who were trying to discover how CNN’s algorithm works just to recreate the index, but with no luck. FGI is calculated daily through a proprietary algorithm, putting together seven different parameters dealing with the options market, stock and bonds return, advancing-declining NYSE volumes, volatility, NYSE NH-NL, junk bonds demand and market momentum. The result is a daily value between 0 (maximum fear) and…
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Il CNN Fear-Greed Index
Solo chi si ostina a ritenere il trading una pura questione di indicatori, (possibilmente magici, con i settaggi segreti che solo i master trader conoscono ma che troppo spesso vendono insieme alla garanzia di un futuro sotto le palme con il laptop sulle ginocchia), non ha ancora assimilato il concetto che il trading, e la borsa in generale, è in grandissima parte pura e semplice psicologia. Una psicologia individuale, quando si parla del singolo trader e del suo atteggiamento nei confronti della propria operatività, ma anche di gruppo, quando si analizzano i mercati nel loro insieme, i grossi indici. Tuttavia, l’importanza della psicologia nei mercati finanziari è pari solo alla…
