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Chapter 24, Part I. Market Sentiment and COT report Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 24, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips: So, looking at any trading approach from a probability point of view, each trader meets such situations when the market moves in the opposite direction absolutely negating the fact that you see the clearest and safest pattern or some exceptionally perfect pattern or something – you still could lose money.

    Why? Because market direction is a result of the overall opinion of all participants – in other words, the opinion of all traders together. This total assessment, some average feeling of the market that weighted on the value of positions is a market sentiment. And the market will move in the direction where sentiment points it to go. Particularly, sentiment explains the direction of the market. Market sentiment can’t tell us where we have to enter, take profit and place a stop order. Still it could be useful, since you can assess the current move from the perspective of the majority – should you follow the current trend or not. This is extremely important for cycle commodities markets, by the way, such as Corn, Wheat and similar. So, where do I stop? Right. So, it’s obvious that we can’t force the market to turn, just since MACD shows a bull trend, but our task here is to react and follow market sentiment.

    Pipruit: So, does it mean that we have to develop some kind of sentiment analysis, to involve it in overall market picture?​

    Commander in Pips: Absolutely right. Mostly it is necessary for long-term positional traders or traders, who deal with macro data releases, but probably it will not be needless for others. Hence the first task is to find a measurement of market sentiment. Without that how can you build a strategy that will involve it, if you even can’t measure it?

    Pipruit: And how we can do that?​
    #1 Sive Morten, Dec 24, 2013
    Lasted edited by : Oct 1, 2016
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