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Crypto Price Analysis – Emotions and Decision-Making

What information can you derive from reading volume? A thread explaining the correlation between emotions and volume. [1/6] trading crypto stocks btc eth

One thing the volume can help you measure is the intensity of the emotion people experience at a particular price movement. It is a great tool for reading the sentiment of the participants. [2/6]

Whether it is up or down, the higher the volume bar, the more intense the crowd is feeling the emotions. Such high volume indicates the market is being ruled by emotions and not rationality. [3/6]

When emotions are high, most people are irrational and make impulsive decisions. The volatile moves of the markets mirror the emotions of the participants. It is better to wait for a sideways move to determine an entry for either a short or a long position. [4/6]

A highly impulsive move upwards is motivated by greed. A highly impulsive downwards move is motivated by fear. These emotions can be experienced in every timeframe but they’ll feel the most intense in larger timeframes. [5/6]

It would benefit you to be aware of these emotions so you can avoid making impulsive decisions at the worst possible time. You are not separate from these emotions. We all feel it. We need to detach ourselves from it & use it as information to make more rational decisions. [6/6]

This post is based on this twitter thread.


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