![]() Generally, when the ratio levels is greater than +/2 (negative for majority net-short and positive for net-long positions), the short-term trading signal generated would be in the opposite direction. This information is accessible on the sentiment report page where a summary table will appear with the detailed reports further down the page.Īn example of the contrarian nature of IGCS is shown below, where client sentiment shows a strong bullish bias in USD/CAD, with 81% of retail traders holding net-long positions (represented by the blue bar), expecting the price of USD/ CAD to rise, while only 19% of retail traders are holding net-short positions, with the ratio of traders long to short at 4.26:1. When trading on sentiment, traders may use IGCS as a contrarian indicator to assess when the market may be reaching extreme levels, specifically when retail traders present a strong bullish or bearish directional bias (usually a IGCS reading of 60% or more towards either side), resulting in divergence between IGCS and price action, illustrating the effect of crowd psychology on traders. The rationale behind this concept is that retail traders have the tendency to follow the crowd and often attempt to call tops and bottoms, failing to recognize that the market may be reaching extreme levels. IGCS is a sentiment analysis tool which focuses on the client positioning of retail traders across a range of markets, including currency pairs, indices, commodities and cryptocurrencies. This article will discuss IGCS as a contrarian indicator, illustrating how to read signal potential from this data. IG Client Sentiment data is based off of live IG retail client trades for a range of markets, allowing traders to determine client positioning by showing the percentage of traders holding long and short positions at any given time. How to Read Signal Potential from IGCS Sentiment
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