In Forex trading, three types of analysis are commonly used by traders to determine their next steps. One such analysis is market sentiment, one of the most influential factors on the exchange rate. Therefore, traders are strongly advised to study VPS Forex trading strategies based on market sentiment.
So, what is market sentiment, and how much does it affect currency values? Market sentiment is the emerging view of Forex traders on the value of an asset or currency. The perception that arises can be caused by fundamental or technical changes in the purchase.
By knowing the market sentiment that will emerge, the trader can decide to sell or buy an asset. So, as an investor in the Forex market, be sure to pay attention to the market sentiment of an investment.
Studying Market Sentiment Trends
Although the market sentiment is a person’s perspective, it does not mean that market sentiment cannot be predicted or analyzed. Several methods that can monitor the movement of market sentiment are candlestick charts, buying and selling ratio data, and DOM. To get accurate results, we recommend analyzing with more than one method.
Always Update Information
One of the Forex trading strategies based on market sentiment must be done constantly updating the latest information. Keep in mind that traders’ perspectives are usually influenced by the knowledge that emerges. So every time there is a new change, market sentiment will continually change. And these changes can occur in minutes or even seconds.
Make sure you read the authentic news every day. Good news is trustworthy and not a hoax. Therefore, please make certain the information about a change is correct and validated so that it does not cause losses in the future. But you have to read some daily forex news categories, such as:
ISM-MI (Institute of Supply Management-Manufacturing Index)
This news is released every month during business hours, where the information contains the results of a survey involving the manufacturing industry and purchasing managers in the United States. The ISM-MI survey is used to determine the manufacturing index. If the ISM-MI value increases, it is confident that the country’s currency will also strengthen.
Trade Balance
The trade balance is the difference between the value of exports and imports in a country. Forex news that shows a positive Trade Balance value in a country can indicate that the value of that country’s currency will get stronger.
CCI
It stands for Consumer Confidence Index, an indicator generated from a survey conducted on thousands of people to determine their level of confidence and outlook on the state of the economy. If the CCI indicator shows a high value, the currency value may strengthen. Forex daily news about CCI is usually released at the end of the month.
GDP
It stands for Gross Domestic Product. If the daily forex news related to the value of GDP increases, a country’s currency will also strengthen. This GDP value shows the importance of production in a country. In daily forex news, this GDP indicator is usually issued three times, namely the first release, the first revised release, then the first and second release revisions.
Don’t Be Easily Tempted or Carried Away By The Flow
Another essential tip for market sentiment analysis is not to be easily tempted and carried away by other traders. Before forming a market sentiment, analyze the news circulating and the trends that have existed before. Learn how other traders will behave when they hear words or changes.
For example, if a market forms a bearish sentiment, market participants will immediately take anticipation to avoid falling prices. If the action is successful, the price will rise again. On the other hand, if it doesn’t work, the information can spread quickly and cause a falling knife.
Update With World Policy
In addition to domestic news, one thing that entirely influences fundamental changes in world policy. Or also financial information abroad related to your country. Therefore, to get 1 step early, make sure to also update on world news.
Recognize All Terms in Market Sentiment
To simplify the whole process and ensure that the strategy works well, understand all the terms in market sentiment. Some mandatory times that we will often encounter are bearish, bullish, down trading, and many more.
So, we can see that market sentiment analysis is fundamental in determining asset value. The asset value of a currency can go up and down based on the sentiment that arises. Therefore, Forex trading strategies based on market sentiment need to be studied, especially from trends. So, investors can know when to make a sale or purchase.
