Forex Stock Exchange Forum
Would you like to react to this message? Create an account in a few clicks or log in to continue.
Forex Stock Exchange Forum

Forum About Trading on Forex,Stock,Binary Options, CryptoCurrency and NFTs

Crypto Kong

You are not connected. Please login or register

Market Sentiment

Go down  Message [Page 1 of 1]

1Market Sentiment Empty Market Sentiment Tue Oct 06, 2015 11:48 pm

time is money

time is money

What is market sentiment?

Market sentiment can is the attitude or general opinion of the market. If the US Dollar is being sold day after day, market sentiment is dollar negative. You would want to look for opportunities to enter short trades on the dollar.

Trading with market sentiment

In general, you want to stick with trading on the same side as market sentiment. This is called "trading with the herd".

You don't want to trade against the trends in forex unless you are an expert and have developed a proven method for trading against the trend. Trading against the trend will be disastrous for you unless you have specialized experience.

Market sentiment extremes

Market sentiment will eventually come to a point where the entire market is "on the train". This means that the majority of traders are done trying to pick the turning point and they decide to finally trade with the trend. This is usually where the turning point will occur in a currency pair. This is not an exact science, but there is a reasoning for it that explains it.

Once all traders get in line and trade in the same direction, there comes a point of exhaustion. The point of exhaustion is when there are literally no traders left to continue the trend because everyone is all in. This is the point where the currency pair will start to flip and reverse directions.

Once the currency flips directions, traders will once again try to enter more trades trying to trade that same trend that is now changed and they will continue to try to trade that original trend.

Most traders will get deeper and deeper into the red until they finally decide that the trend is changed and flip directions.

No matter what your strategy, it's important to have a handle on what the current market sentiment is while you're placing your trades. Going against market sentiment at the wrong time could be very costly to your trading account.

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum