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created at

2026-01-04 04:20:12

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Content

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Decoding Fear and Greed in Trade-Driven Markets

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The interplay of investor fear and greed – often called the twin tyrants of market psychology – becomes especially intense when trade policy shocks hit. In trade-driven markets (equities, commodities, FX, and crypto), sudden tariff announcements or trade-war escalations can trigger primal emotional responses. Fear can send investors fleeing to safe havens (gold, bonds, yen) and prompt panicked sell-offs, while greed can fuel short-lived rallies on rumors of policy relief. In the words of Warren Buffett, a legendary investor, one should “be fearful when others are greedy and…greedy when others are fearful”see.news. Yet in practice, traders often fall prey to biases and groupthink that amplify market moves. Understanding the psychological foundations of fear and greed – and how they play out in different asset markets – is crucial for navigating policy-induced volatility. At its core, market behavior reflects human psychology. Fear tends to dominate when risks rise: loss aversion (the i...

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