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Screenshot of a breaking news alert e-mail from Q2 2017
ETX Capital today announced per the company blog the roll-out of a new feature for the English website – a client sentiment mapper. Spread Betting and Forex trading clients of ETX Capital will be able to look at a product and see how fellow traders as a whole have been trading it. They will be able to view sentiment in a number of different formats.
Firstly, there is the current sentiment feature, where traders can look at the general trading sentiment towards particular product (bullish or bearish) at this point in time. You’ll be able to check out an interactive chart which can quickly and easily show you the direction that other traders are moving towards with regards to these products.
Alternatively, traders can choose to view the actual price of a product versus its sentiment over a given number of days, looking at how traders have previously reacted to price fluctuations of the product in question. Traders should keep in mind that the pricing shown in the graph is delayed by 15 minutes, is provided by a third party and is not in its original raw form.
Let’s look at an example of this sort of chart, using the FX currency pair of EUR/USD:
As you can see from the chart, sentiment and price direction, whilst not exactly the same, can often move in a similar direction as traders react to movements which they can already see. However, it also shows that, unsurprisingly, traders don’t always correctly predict the way that the market is going to move. In terms of general market direction, however, recent market sentiment is certainly a factor deserving of consideration.