In the wild, the herd runs toward hope—and into the trap. Markets are no different. Gamblers chase the dream. Algos lay the bait. Strategy traders? They eat.
Price doesn’t move in a line; it swings in emotional arcs. RSI over 70 = heat, under 30 = cold. The mean—RSI 50—is the battlefield where money flows and the strategy trader thrives.
The Setup: Gamblers Fuel the Extremes
Gamblers buy the highs and panic-sell the lows. They trade on emotion and headlines. When RSI spikes above 70 they think “to the moon”; under 30 they think “it’s over.”
This frenzy powers the move. They see price pushing outside the Bollinger Bands and assume “breakout,” when it’s often bait. Volume spikes, emotions ignite—algos are already one step ahead.