FOREX SENTIMENT INDICATORS
Our sentiment page displays the overall long and short positions of the Vantage book. The sentiment ratio of long to short positions are represented as a percentage and displayed as a sliding scale where red represents our clients’ shorts and blue represents their longs.
Sentiment analysis is another tool that forex traders can use to make trading decisions, adding it to their standard arsenal of fundamental and technical analysis. It works side by side with these methods of analysis by helping to alert you of any supply/demand imbalances which could lead to potential reversals in price.
Think about this as an example: You take a look at our sentiment indicator for EUR/USD and you see that 95% of the book is currently holding a long position. You know that this 95% have to sell to close their trade so now ask yourself, how many more buyers do you think remain? It’s this sort of supply/demand imbalance that presents a trading opportunity to short with the idea of getting in early before the 95% have to close their longs.
Just be aware that as forex is a decentralised market, our sentiment readings are of the Vantage book only. By reading this snapshot of the market however, you can get an idea of the average trader’s mindset and therefore take advantage of the supply/demand imbalances that may result.
*Sentiment data is from VIG client positions