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What does the counter-referential meaning of the currency circle? Why do some people specifically operate in reverse? Market sentiment indicators
What does the counter-referential meaning of the currency circle? Why do some people specifically operate in reverse? Market sentiment indicators
The "reverse reference" in the currency circle, as the name suggests, refers to those reference objects whose views or operations are often opposite to the actual market trend. When such people or groups are extremely optimistic, the market may face a decline; when they are extremely pessimistic, the market may instead rebound. This is not to say that these people deliberately provide wrong signals, but that their judgments may deviate from the mainstream trends in the market, or that their operating behavior happens to be a catalyst for market reversal in a specific situation.
What is the "reverse finger" phenomenon in the currency circle?
1. This phenomenon usually occurs in some subjects with high attention but with low historical prediction accuracy, whose speech or actions are seen by the community as potential market reverse signals .
2. A well-known "anti-reference" may be an individual or group who often makes radical bullish or bearish remarks, whose extreme views often appear in sync with the top or bottom areas of the market .
3. Identifying "anti-finger" is not easy. It requires observation and statistics on the historical performance of a specific object. Not all prediction losers can become effective "anti-finger" .
Why do some people choose to reverse operation?
1. Market sentiment is often extreme . When the market is generally frenzy, it may indicate that the asset price has been pushed up too much; when the market is generally panic, it may mean that the asset price has been oversold.
2. Reverse operators believe in the principle of "don't go to places with a lot of people". They try to go against the trend when mainstream market views are formed , in order to make profits when the trend reverses.
3. Using "reverse finger" to perform reverse operations is an arbitrage attempt based on the historical performance of a specific reference object, and its core lies in the use of group psychological biases of market participants .
4. This strategy requires operators to have strong independent thinking ability, be able to withstand the influence of mainstream market sentiment, and be willing to bear risks different from the mainstream market direction .
5. Reverse operations are not always successful. The continuity of market trends may exceed the expectations of reverse operators , resulting in losses caused by premature counter-trend trading.
Common market sentiment indicators in the currency circle
1. Fear & Greed Index : This is a comprehensive indicator that analyzes multiple data sources (such as volatility, market transaction volume, social media sentiment, surveys, etc.) to measure the current general emotional state of the market. The higher the index, the more greedy the more it means, and the lower the index means the more fear.
2. Social media popularity: By analyzing the number of keyword mentions and emotional tendencies (positive or negative) on platforms such as Twitter and Reddit, you can roughly understand the attention and emotional changes of market participants to specific crypto assets .
3. Media News Headlines: The news reporting tendency of mainstream media and cryptocurrency media, the intensive emergence of extreme positive or negative reports are often associated with the short-term top or bottom of the market .
4. On-chain data analysis: For example, observe the inflow and outflow of funds at the whale address, changes in the fund balance of the exchange, etc. These data can reflect the emotions and potential operations of large investors or institutions to a certain extent .
5. Forum or community discussion: By participating in or observing online forums and communities related to cryptocurrencies, you can intuitively feel the current emotions and expectations that ordinary investors are currently keen .
Potential challenges of reverse operation
1. The “anti-finger” itself may change : an accurate “anti-finger” in the past may lose the validity of its reverse indication due to changes in its own learning or market environment.
2. Lag or falseness of market sentiment: Some sentiment indicators may reflect lag information, or there is a possibility of being manipulated , and cannot be used as the sole basis for trading.
3. Trend strength : In a strong unilateral market trend, reverse operations may face huge pressure of floating losses, and even lead to premature liquidation and inability to wait for the expected market reversal .
4. It is extremely difficult to identify the real market bottom or top . Reverse operators may try to buy the bottom against the trend or touch the top many times, taking the risk of multiple failures.
The above is the detailed content of What does the counter-referential meaning of the currency circle? Why do some people specifically operate in reverse? Market sentiment indicators. For more information, please follow other related articles on the PHP Chinese website!
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