What should you do in the chaotic market?

The market is always based on the concepts of Fear and greed; these concepts are based on human emotions and euphoria.

Everyone is selling out of acute anxiety in a bear market if the stock price declines during a market crash or correction. At that point, you believe the market offers you a chance to purchase. Added fundamentally sound stocks to your portfolio that you could not buy earlier owing to excessive valuation.

The Fear & Greed Index can be a useful technique to gauge market mood when used in conjunction with fundamentals and other analytical tools.

The Fear & Greed Index determines the market’s state of mind. Fear and Greed sentiment indicators can help investors recognize their emotions and assumptions, which can affect their decisions because many investors are emotional and reactive.

Fear is an element of a bearish market. How can one determine the extent of Fear and greed?

Let’s look into investor behavior and market index signals.

The two main parameters of sigh of greed are increased junk bond demands and stocks in an index trading at 52 weeks highs than 52-week lows. On the other hand, there are four parameters of the sign of Fear: increasing safe-haven demand, increasing market volatility, a bearish options ratio, and decreasing trading volume.

The stock market’s movements and stock valuations can be evaluated using the Fear & Greed Index. The theory is grounded in the reasoning that extreme fear tends to lower stock prices, while excessive greed tends to have the opposite effect.

During a tough time, it becomes more vital to take a cautious approach while investing in equity and equity-related products.

 
In view of the above, buying 15 to 20 stocks with a bigger quantity is a wise decision, and being stock-specific, book profits at your predetermined percentages and do this for each stock.