ABOUT MARKET SENTIMENT
What is market sentiment?The market sentiment is the instinctive emotion of market participants(i.e. investor, trader, analyst, etc.). For instance, if FED cries inflation, market would expect higher interest rate and lower company profit, thus, investors/traders have bearish sentiment on the stocks.
what is sentiment indicator?Sentiment indicator is a Sentimental analysis tool, it usually computed various market data(such as long vs. short, advancing vs. declining, etc.) in order to show status of investors/traders' mood in the market. For example, if indicator read -95%, that is to say market sentiment is extremely bearish, and vice versa.
Why market sentiment status?In my opinion, market sentiment status is a short-term trade planning tool, it sheds light on trader's attitude toward the market and showing whether market's mood is bullish, bearish or relatively neutral in a specific period.
By knowing this info, we do have the sense of likely direction of the market, thus, we can plan to trade accordingly. For example, if sentiment status show 50% bullish, 35% neutral, 15% bearish, this indicates the market is trending up, we would expect to plan for long trade on the coming trading session. |
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