How to use Sentiment

Market sentiment is the general feeling of investors about the performance of a financial market, or the markets in general. Imagine logging into Twitter or Facebook and seeing everyones opinion on the events of the day; this is social sentiment. Of course market sentiment is similar, but focused on the financial markets. The aim is to cut through the tons of information, known as ‘infobesity’, to deliver analysis that is actually useful to the financial trader.

Here at Infinox we offer all our clients access to the IX Labs tool, which analyses market sentiment across the key markets such as forex. Using AI (artificial intelligence), IX Labs condenses information that would normally take you hours of reading and watching the news. With a good sentiment analysis tool you’ll understand what your industry peers think of market movements, be able to work on your strategy and look deeper into particular developments.

Understanding Market Sentiment

IX Labs offers at a glance information about which sectors of the market are bullish (going up in value) or bearish (going down in value). Currencies, commodities and stocks tend to fluctuate between a standard range of values. Within this range, there can be peaks and troughs as traders capitalise on the movement. So what influences these fluctuations? Investor’s sentiment, that is, their feeling about the value of the market and the economy in general, influences how much people are willing to trade. If the market sentiment is positive (bullish) they will buy, if it tends to be negative (bearish) they might sell, or hold positions. It is this general feeling and confidence that the market sentiment indicators are built to analyse. Indicators show the percentage of articles displaying positive sentiment in the market, with over 50% categorised as confident (bullish) and under 50% not confident (bearish).

AI (artificial intelligence) monitors the market trends by analysing news reports and giving an aggregate percentage of the professional opinion. Although market sentiment is a great way to get a feel for the general consensus across the industry, it doesn’t necessarily tell you about when to invest. Instead it offers analysis and insight to help traders plan their financial trading strategy. By reading the market sentiment you can identify changing opinions and perhaps get a glimpse into the future. As an example, before market crashes there is often speculation about bubbles bursting, changes in interest rates or even news about trouble at big firms. Although these signals might be slightly easier to read and understand, the day to day sentiment can still make a big impact on your trades.

IX Labs for your market analysis

See what the market is doing in real time. Using cutting edge artificial intelligence, IX Labs analyses the sentiment across the market to give you at a glance information. Sign up now for free access to IX Labs.

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