Forex Education: Trade With Market Sentiment
Pinpointing which markets to trade will always be a difficult task for traders. During today’s Technical Trading Tools & Tactics webinar event, we first covered how to filter potential market opportunities using SSI.
SSI (Speculative Sentiment Index) is an Index that tracks whether traders are buying or selling an underlying asset. The Idea is that traders typically fade the markets strongest trends, and potentially hold onto losses. Knowing this, traders can use SSI as a contrarian market signal. If the majority of traders are positioning long SSI will read positive. Traders reading SSI may then look to sell the market. Alternatively if SSI is negative, traders may begin to look for bullish buying opportunities.
From here traders may elect to use a variety of techniques to enter into a trend based trade. Today, we focused on using a classic MACD crossover. This way, traders can identify when market momentum is turning back in the direction of the trend.
Lastly, traders should always manage risk. While a variety of risk management systems may be applied when trading a trend, a clear exit should always be planned in the event that the market turns.
Did you miss today’s LIVE webinar event? Don’t worry, you can see a full list of upcoming webinars on our events calendar! Our next Technical Trading Tools & Tactics webinars will be held on Thursday this week!
Looking for more information on trading strategies? Check out Forex for Beginners guide here!
--- Written by Walker, Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.