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Jul 14, 2017

Forex Market Sentiment

                                                  Forex Market Sentiment

With billions of dollars' worth of forex transactions placed every single day it is clear that there are many participants in the forex market.

With such a large volume of trades taking place and the majority of them being speculative, it is very important to have an edge when trading the forex market.

Fundamental analysis can give an overview of a currency pair's direction and technical analysis can help to spot trends and reversals.

The key thing missing is one of the most important aspects for any trading strategy which is market sentiment analysis.

Market sentiment analysis will show you how many traders are in a long position, how many traders are in a short position and the volume of these positions.

When you know what the majority of traders positions are and the amount of volume of these positions, you can accurately predict in which direction the market will move.

                                                   How Does It Work?
To keep it as simple as possible, you use the market sentiment data displayed by the indicator to find extremes in long or short positions and volume. When you see an extreme in either or both, you trade against these extremes - this is known as contrarian trading. E.g. If 70% of traders and trading volume are long (buying), you would be looking to short (sell). Trading based on market sentiment is a very accurate and reliable strategy. Read on to find out more... 

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