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  • How To Use in Your Trading: Speculative Sentiment Index

    Transféré par

    Muslim Munis
    23 vues6 pages
    The Speculative Sentiment Index (SSI) from FXCM measures retail trader positioning and sentiment in the FX market. It compares total open long positions to short positions without considering trade size. While most retail trades are profitable, losses tend to be larger than wins. Therefore, taking a contrarian view to the crowd can help catch major market swings, though it risks losing more often. The SSI aims to use sentiment data to time such moves.

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    ssi

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    how to use SSI

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    The Speculative Sentiment Index (SSI) from FXCM measures retail trader positioning and sentiment in the FX market. It compares total open long positions to short positions without considering trade size. While most retail trades are profitable, losses tend to be larger than wins. Therefore, taking a contrarian view to the crowd can help catch major market swings, though it risks losing more often. The SSI aims to use sentiment data to time such moves.

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    © All Rights Reserved
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    23 vues6 pages

    How To Use in Your Trading: Speculative Sentiment Index

    Transféré par

    Muslim Munis
    The Speculative Sentiment Index (SSI) from FXCM measures retail trader positioning and sentiment in the FX market. It compares total open long positions to short positions without considering trade size. While most retail trades are profitable, losses tend to be larger than wins. Therefore, taking a contrarian view to the crowd can help catch major market swings, though it risks losing more often. The SSI aims to use sentiment data to time such moves.

    Droits d'auteur :

    © All Rights Reserved
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 6

    HowtouseSpeculativeSentimentIndex

    inyourtrading

    byDavidRodriguez,QuantitativeStrategistforDailyFX.com
    drodriguez@dailyfx.com&http://www.Twitter.com/drodriguezfx

    www.DailyFX.com

    HowtouseSpeculativeSentimentIndexinyourtrading
    byDavidRodriguez,QuantitativeStrategist
    HellotradersandwelcometoourguideontheFXCMSpeculativeSentimentIndex(SSI)anexcellenttooltogaugetrader
    positioningandsentimentintheFXmarket.
    Unlikemajorequitiesorfuturesmarkets,thereisnosinglecentralizedexchangeforforextrading.Suchdecentralized
    activitymakesfindinguniformvolumeoropeninterestdatanearlyimpossible.FXCM,asanindustryleadingFXbroker,
    boastsimportantFXtradingvolumesandasignificanttradersample.Thefirmmakesitsretailtraderpositioningdata
    availabletohelpfillthisimportantgapinmarketinformation.
    WecallittheSpeculativeSentimentIndexbecauseitsexactlythat:ameasureofbullish/bearishemotion.Todoso,wedo
    nottaketradesizeintoaccountandsimplycomparetotalopenlongpositionstoshortpositions.Letstakealookatareal
    charttoseefurtherintothis.
    HerewehaveachartoftheFXCMSpeculativeSentimentIndexasshownontheEuro/USDollarcurrencypair.

    DataSource:FXCMSpeculativeSentimentIndex,DealingRates
    PastPerformance:Pastperformanceisnotindicativeoffutureresults.

    FirstwellnotetheRetailOpenLongPositionsandRetailOpenShortPositionsasshowninthesubchart;thegreenline
    tellsushowmanyopentradesinoursamplearecurrentlylongtheEuro/USDandtheredlineshowsthenumberwhichare
    short.

    www.DailyFX.com

    Wedistillthesetwonumbersintoasingleratioasshownintheprimarypanel.Iftherearemoretradesshortthanlong,the
    SSIratiowillbenegativeandshowninred.Iftherearemoretradeslongthanshort,theSSIratiowillbepositiveandthe
    figurewillbeshowningreen.
    ThecandlechartinsetinthemainpanelshowsushowchangesintheSSIhavecorrespondedwithchangesinprice.
    Itmayseemcounterintuitiveatfirst,butwetypicallyuseretailpositioningasacontrarianindicatortopriceaction.Orin
    short:ifmostarelong,weforecastpricelosses.Ifmostareshort,weforecastpricegains.
    Why?
    LetusborrowfromourTraitsofSuccessfulTraderseducationalseriestounderstandthisdynamic.
    Welookedatover43millionrealtradesplacedonFXCMstradingserversfromQ2,2014toQ1,2015andcametosome
    veryinterestingconclusions.Thefirstisencouraging:tradersmakecorrectpredictionsmostofthetimeasover50%of
    tradesareclosedoutatagain.

    PercentofAllTradesClosedOutataGainandLossperCurrencyPair

    Datasource:DerivedfromFXCMaccountsexcludingEligibleContractParticipants,ClearingAccounts,HongKong,andJapan
    subsidiariesfrom3/1/2014to3/31/2015across15mosttradedcurrencypairs.
    Note:Thedollarvalueoflosingtradesmayexceedthedollarvalueofwinningtrades.Additionally,itisimportanttoweigh
    therelativeriskandrewardofeverypotentialtradebeforeenteringthemarket.

    PastPerformance:Pastperformanceisnotindicativeoffutureresults.

    Theabovechartshowsresultsofover43milliontradesconductedbyFXCMclientsworldwideover12monthsacrosssome
    ofourmostpopularcurrencypairs.Thebluebarshowsthepercentageoftradesthatendedwithaprofitfortheclient.Red
    www.DailyFX.com

    showsthepercentageoftradesthatendedinloss.Forexample,theEurosawanimpressive61%ofalltradesclosedoutat
    again.Yetthisisonlyonepieceinthepuzzleletuslookatanotherkeyfact.

    AverageProfit/LossperWinningandLosingTradesperCurrencyPair

    Datasource:DerivedfromFXCMaccountsexcludingEligibleContractParticipants,ClearingAccounts,HongKong,andJapan
    subsidiariesfrom3/1/2014to3/31/2015across15mosttradedcurrencypairs.
    PastPerformance:Pastperformanceisnotindicativeoffutureresults.
    Theabovechartsaysitall.Inblue,itshowstheaveragenumberofpipstradersearnedonprofitabletrades.Inred,it
    showstheaveragenumberofpipslostinlosingtrades.LetsfocusinontheEuro/USDollartoillustrate.Weseethat
    EUR/USDtradeswereclosedoutataprofitof61%,buttheaveragelosingtradewasworth83pipswhiletheaverage
    winnerwasonly48pips.Traderswerecorrectmorethanhalfthetime,buttheylostover70%moreontheirlosingtrades
    astheywononwinningtrades.ThetrackrecordforthevolatileGBP/USDpairwasevenworse.Traderscapturedprofitson
    59%ofallGBP/USDtrades.Yettheyoveralllostmoneyastheyturnedanaverage43pipprofitoneachwinnerandlost83
    pipsonlosingtrades.
    Ifwegoagainstwhatthemajorityoftradersaredoing,wemightexpecttolosemoreoftenthanwegain.Rememberthat
    pastperformanceisnotindicativeoffutureresults,butourexperienceshowsthatthismayhavenonethelessbeena
    winningstrategy.LetusseeachartontheBritishPound/USDollarpairtofurtherillustratethispoint.

    www.DailyFX.com

    DataSource:FXCMSpeculativeSentimentIndex,DealingRates
    PastPerformance:Pastperformanceisnotindicativeoffutureresults.
    Ourdatashowsthatgoingagainstthetradingcrowdcouldmakeusloseonourtradesmoreoftenthannot.Acloserlook
    alsoshowsthatcrowdscangoreallywrongwhentheyrewrong.OuraimistouseretailFXtradersentimenttopotentially
    catchandtimemajormarketswings.InthiscaseweseethatthemajorityoftradesturnedshorttheBritishPoundasit
    crossedabove$1.50inAugust,2013.ThetradingcrowdremainednetshorttheGBP/USDuntilthepaircrossedbelowthe
    $1.70level11monthslateranearly2000pipmove.Positionsstayednetlongnearlywithoutinterruptionoverthe
    following10monthsasthepairshedover2000pips.
    Theoretically,atradercouldhavegainedbydoingtheoppositeofwhatthetradingcrowdwasdoing.Theseexamplesare
    verymuchtheexceptionandnottherule.Andindeedthesamechartshowsthatthemajorityofcontrariantradeswould
    havebeenclosedoutatlosses.YetouraimistouseretailFXtradersentimenttopotentiallycatchandtimemajormarket
    swingstakingacontrarianviewofcrowdpositionsallthewhile.
    SeerealtimeSSIdataviatheFXCMTradingStationDesktop,twicedailyupdatesviaDailyFXPLUS,andaweeklyreporton
    thetopcurrenciesviaDailyFX.com.

    www.DailyFX.com

    Disclaimer
    HighRiskInvestment
    Tradingforeignexchangeonmargincarriesahighlevelofrisk,andmaynotbesuitableforallinvestors.Thehighdegreeofleveragecan
    workagainstyouaswellasforyou.Beforedecidingtotradeforeignexchangeyoushouldcarefullyconsideryourinvestmentobjectives,
    levelofexperience,andriskappetite.Thepossibilityexiststhatyoucouldsustainlossesinexcessofyourinitialinvestment.Youshould
    beawareofalltherisksassociatedwithforeignexchangetrading,andseekadvicefromanindependentfinancialadvisorifyouhaveany
    doubts.
    DailyFXMarketOpinions
    Anyopinions,news,research,analyses,prices,orotherinformationcontainedinthisreportisprovidedasgeneralmarketcommentary,
    anddoesnotconstituteinvestmentadvice.DailyFXwillnotacceptliabilityforanylossordamage,includingwithoutlimitationto,any
    lossofprofit,whichmayarisedirectlyorindirectlyfromuseoforrelianceonsuchinformation.
    AccuracyofInformation
    Thecontentinthisreportissubjecttochangeatanytimewithoutnotice,andisprovidedforthesolepurposeofassistingtradersto
    makeindependentinvestmentdecisions.DailyFXhastakenreasonablemeasurestoensuretheaccuracyoftheinformationinthereport,
    however,doesnotguaranteeitsaccuracy,andwillnotacceptliabilityforanylossordamagewhichmayarisedirectlyorindirectlyfrom
    thecontentoryourinabilitytoaccessthewebsite,foranydelayinorfailureofthetransmissionorthereceiptofanyinstructionor
    notificationssentthroughthiswebsite.
    Distribution
    Thisreportisnotintendedfordistribution,oruseby,anypersoninanycountrywheresuchdistributionorusewouldbecontrarytolocal
    laworregulation.Noneoftheservicesorinvestmentsreferredtointhisreportareavailabletopersonsresidinginanycountrywherethe
    provisionofsuchservicesorinvestmentswouldbecontrarytolocallaworregulation.Itistheresponsibilityofvisitorstothiswebsiteto
    ascertainthetermsofandcomplywithanylocallaworregulationtowhichtheyaresubject.
    PastPerformance
    Pastperformanceisnotindicativeoffutureresults.

    www.DailyFX.com

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