August 2008
Intermediate to advanced
208 pages
6h 50m
English
book
Sentiment in the Forex Market: Indicators and Strategies to Profit from Crowd Behavior and Market Extremes
by Jamie Saettele
Content preview from Sentiment in the Forex Market: Indicators and Strategies to Profit from Crowd Behavior and Market Extremes
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80 SENTIMENT IN THE FOREX MARKET
FIGURE 5.5 Speculators (non-commercial) are always wrong at market turns. No-
tice how speculative longs reach a peak as the EURUSD reaches a peak and a trough
as the EURUSD reaches a trough
Source: Chart created on TradeStation
R
, the flagship product of TradeStation Tech-
nologies, Inc.
successful trading—buying low and selling high—seem exceptionally easy.
However, if you can accept that sentiment is the true fundamental reason
why prices trend and reverse, then you have an edge on your competitors
(other traders). Understanding what actually affects market movements
and what is just temporary noise is of utmost importance.
COMMERCIAL AND SPECULATORS GIVE
THE SAME SIGNAL
You have probably noticed that speculative positioning and commercial
positioning move inversely to one another. If a statement is made about the
relationship between speculative positioning and price, then the opposite
is true about commercial positioning and price. For example:
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Sentiment Indicators 81
FIGURE 5.6 The tops and bottoms that were signaled in the GBPUSD by the com-
mercial positioning are also signaled by the non-commercial ...
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