Market sentiment image

Sentimental Analysis

Ohayo gozaimasu (Good morning in Japanese),..

Before we look at the lesser known trade analysis type.

Back to learning Forex. We had been looking into and introducing the ways to analyze Forex charts so as to create trade opportunities. If you don’t remember or understand what a Forex opportunity is or even what analysis it refer back to TYPES OF FOREX ANALYSIS. Then when your done with that please move to TECHNICAL ANALYSIS then FUNDAMENTAL ANALYSIS. In those two posts we looked at how one uses the past to determine price movement while the other uses factors of an economy in relation to supply and demand curve. Now that you’ve gotten to know what those two are we move to…

Sentimental analysis

Previously we had looked at how price action is used to reflect the market. That the market is a reflection of all the traders action in the market. This is on the basis that all traders act the same and the market will reflect this. As you probably been on social media and everyone’s opinion is flooding your feed. We can use that example that not everyone will react, respond to a certain event the same way, some not even at all. So this should be kept in mind when thinking of the market price action as a reflection of the market.

This means no matter how much you want the dollar or a certain currency to strengthen you cant make it so, just like the way your opinion is the cheapest commodity in the world unless your Goldman Sachs. So you have to take in account of the market sentiment. This means whether the market that day is feeling bullish(up) or bearish(down). This means looking at the general outlook on the market to decide what the others are thinking of the market not just your own analysis. Remember this market is so decentralized that no single entity can control the market.

The key is to remember that the market is a complex network and the market reflects all the opinions, thoughts and actions of these many traders. As a trader you must always take this into consideration  and look at the market sentiment. This is the way people are feeling about the market and incorporate this into your strategy. Failure to do so is like ignoring the masses or going against those who actually determine the market. Later we will look at the various market sentiment analysis in detail but now you have the idea.

Next we will move to WHICH FOREX ANALYSIS IS BEST..

 

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