Trading Signals from IG Client Sentiment

By Sara Wise

You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or https://g-markets.net/ warranty is given as to the accuracy or completeness of the above information. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. This has been a volatile currency pair, with dramatic swings over the past few months.

If you can answer that question, then you already understand what your personal sentiment is toward financial markets, whether you trade stocks, foreign exchange or another security. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/JPY-bullish contrarian trading bias. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Oil – US Crude-bullish contrarian trading bias. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUD/JPY-bullish contrarian trading bias. IG Client Sentiment (IGCS) is a tool that traders can use in conjunction with a broader technical and/or fundamental strategy. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias.

Cryptocurrency trading

The combination of current sentiment and recent changes gives us a further mixed France 40 trading bias. The IGCS gauge shows that only about 20% of retail traders are net-long USD/JPY. Since an overwhelming majority of them are biased to the downside, this is offering a bearish outlook for the broader horizon.

• Investors await the latest jobless claims figures, inflation, and speeches from Fed officials to figure out the Fed’s next move on interest rates.
• This information is accessible on the sentiment report page where a summary table will appear with the detailed reports further down the page.
• A strong job market has been credited as a bulwark against a recession, but it has made the Fed’s mission to tame inflation more difficult.

In fact, our sample turned net-long on September 15, 2016 when the GBPUSD traded near $1.3200; it remained net-long until it traded to $1.2600 on December 2, 2016. We need to emphasize that past performance is not indicative of future results, but going against ‘the crowd’ in this instance could have produced approximately 600 points in gains. While IG Client Sentiment is a useful tool, it doesn’t mean that it’s perfectly predictive. Traders should still look to utilize strong risk management in their trades, even with the assistance of IG CS. If the market is feeling positive and optimistic about the outlook then this is referred to as bull market, and a pessimistic market that expects prices to fall is referred to as a bear market.

Asia Day Ahead: Australia’s GDP outperforms, Nikkei eyeing break of bullish flag

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/JPY prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests France 40 prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/JPY prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Germany 40 prices may continue to rise.

The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Data is calculated to the nearest 1%, and updated automatically every 15 minutes. The latest gains came as investors reviewed reports on consumer confidence and the labor market. The Conference Board, a business research group, reported that consumer confidence tumbled in August, surprising economists that were expecting levels to hold steady around the strong July reading. Consumer confidence and spending have been closely watched amid persistent pressure from inflation. TOKYO (AP) — Asian shares rose Wednesday, boosted by a Wall Street rally that came on positive reports on consumer confidence and job openings.

Trading platforms

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests FTSE 100 prices may continue to fall. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall.

The lower section of the diagram simply shows the actual number of short and long traders overtime. Since traders had become more and more net-long, it’s no surprise to see the blue line well above the red line for long periods. In addition, while the majority of the market will lean one way or another, every participant holds their own view on why the market is performing the way it is and where it is heading next.

Open a free, no-risk demo account to stay on top of index movement and important events. From December 19th, 2022, this website is no longer intended for residents of the United States.

European markets: Here are the opening calls

However, these indicators should be used alongside other technical and fundamental analysis to provide added depth to research, rather than used as a single authority on the outlook for financial markets. The above examples should help to illustrate how to treat client sentiment. It is not enough merely to ‘do the opposite’ but look at the changes in sentiment and the direction of travel for sentiment as well as the price. For short-term traders, identifying these relative extremes in price versus sentiment can be a useful addition to a trading strategy. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Silver-bearish contrarian trading bias. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias. 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. In this instance, there is a large disproportion between bullish and bearish sentiment, resulting in a bearish trading signal being generated, suggesting that the prices may continue to fall. This information has been prepared by IG, a trading name of IG Markets Limited. Market sentiment indicators are one of the most helpful tools at the disposal of investors looking to judge how the market feels now and where sentiment is headed, helping to find undervalued or overvalued opportunities.

CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. We’ll note that there are three percentage markers different to the others in the above chart—at 33.3%, 50%, and 66.6%. The 50% mark shows at which point the majority of traders is either net-long or net-short.

Financial markets are fuelled by emotion and this is one of the main reasons investors can find opportunities to trade. The pair had been trending lower in the early months of 2019, and client sentiment as seen below was a good predictor of possible turning points. Clients were significantly net long at the lows of the downtrend, for example at $1.13 and then $1.125, and then short positions increased at the lower highs at $1.15 and $1.14. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.

IG Client Sentiment, or IG CS, uses data derived from IG retail traders with live positions. Essentially, traders are able to see where the majority of traders are positioned, whether long or short, when analyzing trades. Traders can access IG ig market sentiment Client Sentiment data using our interactive tool wheremarkets and asset classes can be filtered accordingly. The two most well-known are open interest in options, which largely applies to stocks, and the Commitment of Traders Report (CoT).

Unless there is good reason for sterling to have broken through a new high, the drive upward is likely to have been spurred on by emotion and, eventually, will fall back down to the $1.00-$1.10 range it was accustomed to. Fear works in the same way but can evoke more knee-jerk reactions from investors, which tend to be more concerned about losing money than missing out on opportunities to make money. Market sentiment is demonstrated through price movements of the security in question. Use this to see how IG client accounts with positions on this market are trading other markets.

Returning to the NZD/USD example, after realizing that most traders are long NZD/USD, one could reasonably assume that this must be the correct trade to place. Open a free, no-risk demo account to stay on top of forex movement and important events. Discover why so many clients choose us, and what makes us a world-leading provider of CFDs. Being able to spot any emergence of fear or greed is helpful in identifying those that are usually selling-up as prices hit the low of a price movement, and those that chase the crowd and buy just as the market heads lower.