What Is Sentiment Analysis?

The sentiment analysis is a theory of Forex analysis that focuses on trading psychology and the classification of modes of travel retailers take on a subjective basis. It is the art of avoiding going after the bandwagon. The sentiment analysis in forex trading is based on the assumption that, when a large number of traders are tilting towards a direction change, then it is an indication that the change is likely to occur in the near future. Therefore, rather than going after the popular trends, an operator using sentiment analysis put his trade in the opposite direction, in anticipation of the passage. For example, he or she will execute a sell order, even if the price of the currency appreciates. It is based on sentiment analysis which states that when most traders have opened long positions, then the currency will be overbought, which could lead to a movement in the opposite direction.


The forex market is a multi billion with many players. Among the participants in this activity include the countries, major financial institutions, companies and speculators. It is of the essence to note that each participant has an opinion about the direction the market is taking, and this is what determines how he or she places his trades. However, regardless of the degree of confidence that he or she feels about the direction the market should take, he or she may still suffer losses because management takes the market is often determined by the combined feeling of participants market. And that most market participants feel about the direction the market is called Forex market sentiment.


Feeling analysts seek to know what investors feel the market by conducting surveys and asking their opinion on the merchants in the current market situation. And when placing their trades, they go against the general views of traders. For example, if no more than twenty-five percent of traders interviewed are sure of the future profitability of a market, traders using sentiment analysis generally increases a bet on the market in anticipation of short trading opportunity time per session. To measure the general sentiment of traders in the market, analysts consider different sentiment indicators.