Market Sentiments & Insights

The market sentiment indicators on our site allow us to see the open positions of traders in various markets.

By knowing which currency pairs and financial instruments are bought or sold, and the trading ratio, we can understand the wave of trends and predict price movements in the near future.

This site explains the importance of market sentiment and also attaches sentiment indicators, so feel free to use these indicators as a reference when you trade financial instruments.

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What is the Market Sentiment?

Market sentiment is a graph and visualization of the “psychology” of investors regarding the buying and selling of the product we want to trade, and is the investors’ overall attitude toward a particular market or product, where an overall attitude means a combination of perspectives, opinions and sentiments of all investors entering the market, not opinions of a single investor, nor the opinions of particular investor groups or experts.

Understanding market sentiment allows us to predict the potential for future price fluctuations. For example, a drop in the price of a product means bearish market sentiment, and rising prices for certain products means bullish market sentiment.

Market sentiment plays an important role in making the trading decision of many investors, so it is also one of the most important indicators for short-term traders and intraday traders who use technical analysis.

Market Psychology

The numbers that appear on the market sentiment indicators are a quantification of the “market sentiment.”

“Market psychology” is, more precisely, the psychology of the group that fluctuates the market.

“Market psychology” is quantified through price fluctuations of tradeable stocks. When we invest CFDs such as stocks, commodities, currencies and indices, we need to understand the current market supply or demand and market trends.

More specifically, we must judge exactly whether the indicator which the sentiment indicator shows means bearish or bullish.

It is difficult to accurately predict that the market will head in a particular direction. Therefore, traders use market sentiment indicators to predict whether the price of instruments they want to trade will go up or down or not.

Even if we guess theoretically by using trading analytic tools such as technical analysis or fundamental analysis, keep in mind that some degree of investors’ subjectivity and desire is also one of the causes of price fluctuations in market sentiment.

How to determine market sentiment

Sentiment analysis includes multiple factors such as economic reporting between companies and nations, price history, seasonal factors, and politicians’ statements.

Sentiment analysis also includes some of elements used in technical and fundamental analysis.

Sentiment analysis include both technical and fundamental analysis to guide the prediction of whether the price of trading instruments will go up or down.

8 elements used by sentiment analysis

  1. Transaction volume
  2. Predicted volatility (using indices such as VIX)
  3. Comparison of the number of rising instruments and the number of falling instruments
  4. Sentiment indices based on inquiries
  5. Comparison of new highs and new lows
  6. Analysis of news such as politicians’ statements and ascending or descending of interest rate
  7. Climate
  8. Major political events

Use sentiment analysis in combination with another analysis

Sentiment analysis is not an independent trading strategy, but a trading tool that is used in combination with trading strategies and tactics such as technical analysis and fundamental analysis.

Sentiment analysis does not give us the exact timing points to enter or leave the market at the appropriate time.

Sentiment analysis is a tool used as a judgment material to understand the trading trend or supply/demand of trading instruments. It helps us decide whether we should follow trends of many unspecified investors or not.

Summary

  • Sentiment analysis is a quantification of “market sentiment” rather than forecasting.
  • It is not possible to predict the market in the near future only by sentiment analysis of unexpected events.
  • No matter how well we interpret markets sentiment, we cannot predict market prices 100% accurately.

Lists of Market Sentiment Indicators

The value of the indicator depends on the broker.

FXGT

Below are the sentiment indicators for investors using FXGT .

 

Instaforex

Below are the sentiment indicators for investors using InstaForex .

Current positions of investors using InstaForex

 



 

Popular Currencies Pairs for InstaForex Investors

 


DukasCopy

Below are the sentiment indicators for investors using DukasCopy .

This sentiment indicator shows the current percentage of long (buy) and short (sell) positions. The data is updated every 30 minutes.

Available instruments include CFDs for various currency pairs, commodities, stocks and indices.

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証券取引所まるわかり大辞典(FX・CFD Laboratory)
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