According to @StockMarketNerd, the most compelling risk/reward often appears when high-quality companies face the loudest bearish noise and investor fear, making holding through drawdowns difficult but potentially rewarding; source: @StockMarketNerd. Traders can operationalize this by monitoring fear gauges such as the Cboe Volatility Index (VIX) for equities and the Crypto Fear & Greed Index for BTC and ETH to spot capitulation zones defined by extreme fear readings; sources: Cboe Global Markets (VIX methodology) and Alternative.me (Crypto Fear & Greed Index methodology and thresholds). In crypto, negative perpetual funding rates and declining open interest indicate short crowding and stress conditions rather than bullish guarantees, providing context for sizing risk when sentiment is washed out; sources: Binance Futures (funding rate mechanics documentation) and CME Group (open interest definition and usage). A disciplined approach is to scale entries in tranches during extreme fear readings (e.g., Crypto Fear & Greed Index at or below 25) while predefining invalidation levels to manage downside; sources: Alternative.me (index scale and extreme fear threshold) and CFA Institute (risk management and position sizing best practices). For equities, focus on quality screens such as persistent positive free cash flow and moderate net leverage to avoid value traps when buying weakness, aligning with established quality-factor definitions; sources: AQR Capital Management research “Quality Minus Junk” (quality factor framework) and MSCI Quality Index methodology (profitability, stability, and leverage criteria).