Use Market Sentiment as your Bull and Bear Indicator

September 18, 2015 14:10

Dear Trader,

We are pleased to introduce our new market sentiment indicator for Forex pairs and gold, which you can access via our website.

Now you can improve your trading decisions, by gauging the market's mood in real time.

How it works

Our market sentiment indicator acts as a bull and bear index, using widgets that indicate if traders are long or short on a specific market. For example, this market sentiment board shows you 78% of traders are short on EUR/USD and 22% are long.

Did you know that market sentiment is a great contra-indicator too?

We understand that the idea of a contra-indicator may seem strange, so let's take a closer look. In this market sentiment indication, we know that:

  1. 78% of traders who are short of EUR/USD, will at some point have to close their trades via buying
  2. 22% of traders will also have to close their trades, though in their case it will be via selling.

In short, you are given insight that at some future point there may be 3.45 times more retail demand coming into the market (based on the ration of 78% vs 22%), than there is supply. So what? This insight tells you there will probably be more buying pressure than selling pressure, which means:

  1. it's something you can take advantage of, with
  2. open, long positions that are based on the indicator's values.

Use market sentiment to indicate, not confirm

Our market sentiment information provides one the few leading indicators of the Forex market's mood. But like any indicator - you need to limit your trading risks by using it together with personal risk management.

So, use this tool to enhance your trading ideas or as a focus for interesting market situations - not as confirmation of the market's next move.

We welcome your feedback, so please feel free to send it here:

Best regards,

Admiral Markets

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