The number of traders net-long is 0. Positioning is less net-long than yesterday but more net-long from last week. Oil - US Crude: Retail trader data shows The number of traders net-long is 4. 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.
The combination of current sentiment and recent changes gives us a further mixed Oil - US Crude trading bias. Germany 40 : Retail trader data shows The number of traders net-long is 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Germany 40 prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Germany bearish contrarian trading bias.
The number of traders net-long is 3. France 40 : Retail trader data shows We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests France 40 prices may continue to fall. The combination of current sentiment and recent changes gives us a further mixed France 40 trading bias.
FTSE : Retail trader data shows We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests FTSE prices may continue to fall. The combination of current sentiment and recent changes gives us a further mixed FTSE trading bias. The number of traders net-long is unchanged than yesterday and 3. Gold : Retail trader data shows We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.
The combination of current sentiment and recent changes gives us a further mixed Gold trading bias. Silver : Retail trader data shows We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Silver prices may continue to fall. 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. US : Retail trader data shows We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US prices may continue to fall.
The combination of current sentiment and recent changes gives us a further mixed US trading bias. Positioning is less net-short than yesterday but more net-short from last week. Yet traders are less net-long than yesterday and compared with last week. Wall Street : Retail trader data shows We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Wall Street prices may continue to fall.
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. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances.
Forex trading involves risk. Losses can exceed deposits. Each and every trader will have their own personal explanation as to why the market is moving a certain way. When trading, traders express this view in whatever trade he takes. But sometimes, no matter how convinced a trader is that the markets will move in a particular direction, and no matter how pretty all the trend lines line up, the trader may still end up losing. A forex trader must realize that the overall market is a combination of all the views, ideas, and opinions of all the participants in the market.
This combined feeling that market participants have is what we call market sentiment. It is the dominating emotion or idea that the majority of the market feels best explains the current direction of the market. As a forex trader, it is your job to gauge what the market is feeling. Are the indicators pointing towards bullish conditions? But what we can do is react in response to what is happening in the markets. Having a sentiment-based approach can help you decide whether you should go with the flow or not.
Lite V. The indicator displays information about market sentiment on the MT4 terminal chart. CurrentRatio V. OpenInterest V. TradingActivity V. Derivatives V. StopLossClusters V. The indicator displays levels on the chart with the maximum volume of Stop Losses set by other market participants. ProfitRatio V. Ratios V. OrderBook V. Open trades and pending orders of retail traders are displayed as a two-sided histogram.
Recommended Resources. Set of derivatives from the Order Book data. Live to trade another day is the main thought process in a risk off environment. During these times investors move their money into what are traditionally perceived to be safer currencies or assets. Generally, a safe currency is one that belongs to a country that has a current account surplus combined with a stable political and financial system with low debt to GDP ratios. Virtually every country has high debt to GDP ratios.
Basically, the market is looking for a nice safe place to park its money when there is a lot of fear. Which economy will be the last economy to collapse should the absolute worst case scenario materialize and the global financial system completely fall apart is the burning question on the markets mind.
When the markets flock to these safer currencies in risk off times it is known as a safe haven flow if there is a lot of fear dominating the overall market place. However, for more normal risk off environments, the market is just looking for a stable place to put money while the short term issue sorts themselves out so the market can get back to hunting for profits and creating a new risk on environment.
As with all markets the Forex market is prone to the normal ebbs and flows of supply and demand. Treasury bonds tend to benefit in risk off times because they are considered to be free of risk. If the U. Generally speaking, stock markets tend to sell off and assets such as gold tend to rise in risk off environments. There is also a pit stop between risk on and risk off which is called a sideways market.
A sideways market is dominated by the need for more information as traders and investors cannot come to a consensus on which way to trade the markets. Are we hunting for profits or are we preserving capital? Essentially, the market is in a wait and see mode. Participants are looking for some kind of risk event, such as an announcement from a central bank or other high impact news, to give them the information they need so they can start buying or selling again.
Basically, the market is waiting for clues as to whether to go back into risk on or risk off. To make matters even more difficult, it is really difficult to call the end of a sideways market technically. There needs to be a wave of positive or negative sentiment that is strong enough to get the prices moving again in a sustained manner.
Previously we learned about what a risk off environment is. Safe haven currencies and safe haven flows are very similar to that of a risk off environment. The major differences are the particular assets that move and the degree to which they move. A safe haven flow will tend to move much more than a risk off sentiment. Sometimes this can be extreme panic. A safe haven is any asset class or investment that the market would expect to hold its value, or potentially increase in value, when there is something that is causing a major fear or concern to filter through the markets.
The prices of safe haven assets will move a lot if there is a very real reason for something to cause fear or panic. A major geo-political event such as a war breaking out can quite easily cause safe haven flows as investors dump any risky investments and flock for safety. Prices can tend to extend much further than would seem rational because people and traders can get highly irrational at times. Safe havens exist simply because large financial and investment companies need a place to protect themselves in times of uncertainty.
In fact, most of the large asset management firms have a legal mandate to be close to fully invested at all times. This is because they have made that promise in writing to their clients in a document that is often referred to as a prospectus. These companies are legally required to submit this prospectus to the regulators or monetary authorities that oversee their particular capital market.
This means that they need to move from one asset class to another rather than straight into cash. And because so many companies are required to do this then they all tend to flock to the same sort of investments when there is fear in the market. There is also a level of speculation to safe haven flows. This speculation can add even more fuel to a safe haven flow.
At the time of this writing the Japanese Yen tends to get most of the safe haven flows in the currency market for shorter term flows. This is an interesting safe haven currency because, while it does have a stable political system and the currency itself is very liquid and highly traded, its economic situation at current is not something that other nations are particularly jealous of.
Japan has struggled for decades to generate any significant economic growth and its debt to GDP ratio is off the charts being one of the highest in the entire world. Normally this out of control debt ratio would be enough to stop investors from placing any money into that economy. However, Japan is also one of the largest creditors in the world owning foreign assets that are comparable in value to the massive debt levels they have on the books.
Another interesting thing about the Japanese situation is that almost all of their own national debt is held internally by the people and businesses of Japan. This means that if the debt holders called in the debt to be repaid then they would effectively be pulling the ceiling down on their own house. It is highly unlikely that the people of Japan would knowingly collapse their own economy. Any fears of a collapse are highly unlikely even with their stratospheric debt ratios.
All these reasons are why the Japanese Yen tends to be the first go to currency in times of safe haven flows and market panic. If you are trading a Yen pair you should be very aware that if something happens in the news to cause fear and panic the Yen can and will react violently almost immediately as everyone plows their money into the Japanese Yen.
This is especially true if you are shorting Yen at that time because you could be offside on your position quickly. It is not uncommon for the Yen to rally many times its normal average daily range in one session when there is a market panic brewing.
Deflation is the kiss of death to any economy and central banks will do almost anything to avoid it even if that means deliberately weakening its own currency. Because of an active central bank trying to deter investors, the Swiss Franc is usually only bought in large volumes during extremely worrying events that have the potential to last for the longer term.
Think of war or massive financial crisis. The one problem with the Swiss Franc as a safe haven currency is that the central bank takes an active role in deterring people from buying its currency. The Swiss national bank has no issue with manipulating the price of their currency at any time without warning to the market. Another Interesting point, at the time of this writing the SNB actually have a negative rate of interest which means that investors have to pay to own Swiss Francs.
However, in times of mass panic investors have shown that they would pay a negative rate in order to keep their capital safe. The U. When there is a financial crisis the U. This makes the U. The one problem facing the U. This has the potential to cause the U. Because of this the USD is generally the least attractive safe haven currency in the markets for shorter term safe haven flows. However, in major global recessions, such as the financial crisis of , the USD has shown that it will appreciate over longer term safe haven flows.
For shorter term immediate safe haven flows the market will buy up the Japanese Yen. For longer term fears and panics the market will look to buy the Swiss Franc and the U. Buy the rumor sell the fact is one of the more common types of sentiment that you may have heard about before. Buy the rumor sell the fact occurs when the market has a strong expectation of a certain outcome and then trades in line with that expectation before the particular risk event. A risk event is any piece of economic data or news that is scheduled to come out and is considered to have potentially high impact on prices of currencies in the Forex market.
How long the market will buy the rumor before the factual piece of data is released will all depend on how high impact the data is. The market will then trade with its expectations ahead of the expected event, and if it is what the market expected, the market will abandon the trade and the price action reverses as traders start taking profits from the nice profitable run up into the risk event. Imagine that the market is anticipating that the Bank of Canada BOC , the central bank of Canada, will increase its main benchmark interest rate at its next rate decision announcement.
Speculation started about 2 weeks before the rate statement and there have been various leaks to the press about the fact that the hike is going to happen. In fact, the bank of Canada themselves have come out with some strong wording that a hike is potentially coming soon.
What will happen in this type of scenario is that the price of the Canadian dollar will rally as speculators start piling into the Canadian dollar well ahead of the actual rate decision. As the rate statement approaches the market has done a good job of fully pricing in the rate hike.
When the actual event happens, and the BOC does indeed hike interest rates as expected, what you will likely see is instead of the market buying up Canadian dollars the market begins selling them off. News traders get squeezed out of their long positions that they entered just after the announcement and end up losing money as the price goes opposite to what they thought it should or expect it to be doing based on everything they have learned about the Forex market.
Higher interest rates are supposed to be positive for a currency. So what happened in this example? The market had been so confident that the rate hike would happen that they started positioning themselves long before the interest rate hike had been confirmed by the Bank of Canada. When the time came for the hike the market was already in profit and decided to book those profits rather than risk getting into a new position.
When done in enough volume, this profit taking can actually move the price of a currency significantly. This is often seen at the end of large moves or at key support and resistance points in the trading session. As the rest of the market catches on to the fact that this has become a buy the rumor sell the fact type move they now start selling the Canadian Dollar to try and take advantage of this fact which of course pushes the currency even lower. This can be a very frustrating for many traders because the price action goes the opposite way that it should based on the information that was just released.
But what the trader fails to realize was the large move that took place for a couple weeks going into the risk event. This is buying the rumor and selling the fact. It defies logic at the time but when you go back to the past it makes a lot of sense. The market is a discounting mechanism after all. Value trading happens when value traders enter the market looking to position themselves in line with the long term fundamental trend.
They look to do so when the shorter term sentiment has moved price in the opposite direction of the actual fundamental trend. There will be many traders watching these developments to try and use the pullback as an opportunity to get back into the market at better price.
Everybody loves a good discount! The only reason they can do this is because the sentiment has taken price to an attractive point where it makes sense to get back in the trade in the direction of the big picture fundamentals. But, the big question is when would they want to do this? However, 1 bad piece of economic data in a long series of very strong data points does not change the overall trend; it merely will cause a short term pullback.
This is a great value trading situation because the fundamental trend is still intact but you now have a discount to get in at better prices. Value traders can be classed as some of the largest hedge funds, banks, and financial investment houses in the world.
Many funds are so large that they must become value traders because they need to have a longer term outlook. They need to have this longer term outlook because they have a huge amount of financial assets that are too large for shorter term trading. These value traders look to get into a trade with the expectation of the fundamental trend resuming at some point. In some situations it could be that they are simply adding to an existing position at a more attractive price.
A good bargain is hard to resist! When there is enough money behind this type of trading activity it effectively ends any type of short term sentiment against the fundamental trend that may have been in control up to that point. The further the short term sentiment has taken price away from the fundamental trend direction the more likely it is that value traders will look to get back into the market and hunt for a good bargain.
Value traders will typically be on the hunt if price has moved significantly beyond the average daily range. They will be even more likely to hunt for a spot to get in if the pair has moved significantly over more than a single session.
This can sometimes lead to sharp reversals back in the trend direction. You identify this type of sentiment at times when you can see price has pulled back against the overall fundamental trend because of some short term sentiment that the market has over focussed on. Many of the largest funds in the world use value trading to one degree or another in their investment mandate so you know that they do definitely have the power to move the market if enough of these traders decide that something has value at its current prices.
Every trading day we have many different types of option contracts expiring at many different times against many different currency pairs. But how do they move the price of the currencies? In simple terms, the option price can act like a magnet at times.
There are indeed many variations of how options are structured but for the sake of simplicity we will stick to plain vanilla options because they are the most widely used and tracked by the Forex market. What we are looking out for is the price action leading up to the am expiry time. If there is an expiry of a big option of, say million or larger, then this will bring the markets attention to the price of the option. If the expiry price is close to where the market is currently trading, say 30 to 50 pips, then the price may be drawn to that option expiry level.
There are a few things that may happen when there is a large option expiry leading into am EST:. The price may head towards the price level. This could be because the buyer of the option contracts wants to cash in on their bet. The only way they can do that is if they push price to the price level.
If it is a big enough payoff then it makes sense to use some more money and push price to the level. Price may reject strongly off the price level.
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