Ever wonder what other traders are doing in the market or what trader sentiment is on a particular asset? Trading philosophy dictates that you trade with the market, not against it. So when buyers are dominating the market, you should enter buy positions. Conversely, when sellers are dominating the market, you should enter into a selling position.
What is trader sentiment?
There are many ways to determine what position to take. These include trading along with the trend or trading based on a specific candle color. IQ Option provides another useful tool to help you analyze current market behaviour. The Trader Sentiment widget.
This widget appears on the left side of your chart. It simply shows what percentage of the market is buying or selling. This guide will teach you how to set up and use the Trader Sentiment widget.
What is meant by investor sentiment?
Investor sentiment can be understood and defined very broadly. It is mainly about the mood of market participants towards future prices. This attitude is largely based on beliefs. Beliefs are very difficult to measure. Market sentiment research companies use a variety of questionnaires and surveys to gauge market sentiment.
IQ Option has developed a tool that determines sentiment in real-time. In addition, the sentiment is determined on the basis of buy and sell orders, so it gives a very up-to-date and real picture of traders' attitudes towards a given asset. Trader Sentiment shows the real balance between buyers and sellers.
Setting up the Traders' Sentiment widget on IQ Option
This widget will be displayed on the left side of your chart. The upper part is colored red/pink while the lower part is colored green.
Using the Trader Sentiment indicator to trade on IQ Option
This widget essentially tells you what the majority of traders are doing in real-time. When the market is dominated by sellers, you'll notice the red/pink zone gets larger. This is accompanied by an increase in the “lower” percentage value and a decrease in the “higher” percentage value. If the markets are dominated by buyers, the green zone will get larger while the “higher” percentage value increases. At the same time, the “lower” percentage value will decrease and so will the pink/red zone of the widget.
How do you trade based on the Trader Sentiment widget?
There are two types of traders on the IQ Option platform.
The first type trades with the crowd. If the crowd's sentiment is to buy, these traders will enter buy positions. So if the green zone on the widget is larger and the “higher” percentage is higher than 50%, these traders will enter buy positions and vice versa.
The second type is the conspiracy theory type. They believe that the markets are being manipulated by the broker. This group will usually trade against the crowds.
Whatever group you belong to, I suggest that before you trade based on this widget, take a look at what the price charts are saying. If the widget signals buyers are dominating the market and the charts point to an uptrend, it's safe to trade with the crowds. If however, the chart tells a different story, trade against the crowd.
The Trader Sentiment widget provides a quick way to know how a good portion of the other IQ Option traders are trading. Now that you've learned how to use this widget, try it out on the IQ Option practice account and check the market sentiment today. Share your results in the comments section below.
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