Trading with IG Client Sentiment Data

Sentiment indicators show the percentage, or raw data, of how many trades or traders have taken a particular position in a currency pair. For example, assume there are 100 traders trading a currency pair; if 60 of them are long and 40 are short, then 60% of traders are long on the currency pair. Sentiment may improve technical analysis and enable more consistent trading, particularly for those looking to trade against the consensus.

Our forex market sentiment indicator shows the percentage of traders going long and short, how sentiment is shifting, and whether the overall signal is bullish, bearish or mixed. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Germany 40 prices may continue to fall. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests France 40 prices may continue to fall. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall.

In the above diagram, price is in a strong downtrend and sentiment is showing over three times more long traders for every short trader, therefore, this can be regarded as a bearish signal. Another useful and often https://g-markets.net/ overlooked feature of the report is the changes in long and short positions. This feature is particularly helpful to traders when recent moves in sentiment are sizeable and move conversely to the overall sentiment.

In short, when a large percentage of people are selling, the sentiment is actually bullish (and vice versa). This strange phenomenon boils down to the perceived activities between retail and institutional traders. The ‘sentiment nerds’ should have forex ig client sentiment undoubtedly heard of the IG Client Sentiment Indicator/Index in forex, one of the most prevalently used sentiment tools. The client positioning indicator is provided by IG, a publicly traded, UK-based broker with beginnings stretching from 1974.

Bitcoin USD

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger NZD/USD-bearish contrarian trading bias. The data suggests about 61% of traders are presently long while the rest are short. The natural assumption would presume the overall sentiment is bullish, but this works in reverse as explained. The tool is a graphical representation of client positioning or a percentage of how many clients are net-long (buying) versus net short (selling) on a particular pair.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CHF prices may continue to fall. 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-long suggests Silver prices may continue to fall. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD prices may continue to fall.

USD/JPY ANALYSIS & TALKING POINTS

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Wall Street-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 Oil – US Crude-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 AUD/JPY-bearish contrarian trading bias.

• Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.
• While the IG’s sentiment index is free of charge and a lot easier to comprehend than other indicators of this nature, it only provides a microcosmic view of the entire forex market.
• Leveling off or declining open interest signals the uptrend could be nearing an end.
• For example, strength in euro futures (US dollar weakness) will likely keep pushing the EUR/USD higher.
• IG Client Sentiment, or IG CS, uses data derived from IG retail traders with live positions.

In our next guide we will take a closer look at more detailed examples of how we might use the IG Client Sentiment index in our trading. IG Client Sentiment is viewedas ‘fading the crowd’ or going the opposite direction of retail traders. All of this is made possible with IG’s accurate, real-time data on the most frequently traded markets – which can be used in any sentiment trading strategy. For example, the EUR/USD chart below shows the projectible nature that can occur with IGCS.

EUR/USD

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Germany 40 prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests Oil – US Crude prices may continue to rise. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall.

Find out more with our guide to trading with IG client sentiment data, as well as how to approach sentiment analysis in forex trading. We want to clarify that IG International does not have an official Line account at this time. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake. 72% of retail client accounts lose money when trading CFDs, with this investment provider. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

How to use IG client sentiment

The data is only gathered from clients of that broker, and therefore provides a microcosmic view of market sentiment. The sentiment reading published by one broker may or may not be similar to the numbers published by other brokers. Barchart.com provides an easy way to chart COT data along with a particular futures price chart. The chart below shows the Daily Continuous Euro FX futures contract with a Commitment of Traders Line Chart indicator added.

The COT data is not displayed as a percentage of the number of traders short or long, but rather as the number of contracts that are short or long. Using client sentiment as the starting point however, can be extremely useful as it can inform which market to trade and in what direction, before any other analysis is even done. Thereafter, traders can use technical analysis to spot ideal entry and exit points for that market.

• You can then combine this data with historical market data to see how client sentiment changes as the market changes.
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests FTSE 100 prices may continue to fall.
• Traders should be drawn to extreme levels (very short or very long) when analyzing sentiment, as this is where the tool provides clearer signals.
• Statistics are available for all futures contracts traded, and open interest can help gauge sentiment.

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-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-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-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 AUD/USD-bearish contrarian trading bias. Client sentiment, which looks at the number of long and short trades on a particular market, is a useful tool in a trading strategy.

Live prices on the most popular forex markets

Recent changes in sentiment warn that the current FTSE 100 price trend may soon reverse higher despite the fact traders remain net-long. Recent changes in sentiment warn that the current EUR/GBP price trend may soon reverse higher despite the fact traders remain net-long. The combination of current sentiment and recent changes gives us a further mixed EUR/CHF trading bias.

Wait for the price to confirm the reversal before acting on sentiment signals. Currencies can stay at extreme levels for long periods of time, and a reversal may not materialize immediately. Traders should be drawn to extreme levels (very short or very long) when analyzing sentiment, as this is where the tool provides clearer signals. As can be seen in the graphic below, there is a relatively extreme figure of 78% for NZD/USD. The figure is written in blue (representing longs) and the horizontal bar also depicts the sentiment imbalance in favor of the longs. Learn more about DailyFX’s proprietary indicator based on real data from live traders on parent company IG’s platforms.

Trading on Sentiment: Using IG Client Sentiment Data

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-short suggests GBP/JPY prices may continue to rise.