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Sources of sentiment

  • #1
  • First Post: Apr 25, 2020 12:31pm Apr 25, 2020 12:31pm
Hi,

I am just brainstorming where one could get sentiment from. This is the list I could come up with so far:

  1. News articles
  2. Stocktwits
  3. Confidence surveys
  4. National bank reports / statements
  5. COT report
  6. Performance of country stocks and bond indices
  7. Volume from options and futures
  8. Options pricing

Do you guys have any other ideas?

  • #2
  • Apr 26, 2020 5:54am Apr 26, 2020 5:54am
Hello Custos, It's nice to see you here again.

I find that different assets respond to different measures of sentiment. COT report is my favourite sentiment indicator for commodities, but not currencies.

For currencies I follow whatever economic indicator the relevant central bank has said it is currently watching. If the central bank of a particular country has been talking about employment, I watch employment numbers for that country. If the CB has been talking about inflation, I watch inflation numbers for that country.

Risk sentiment has a more immediate impact than central bank movements though, if stock indices in general are moving down or markets are uncertain I look to buy safe haven currencies and vice versa. Preferably I only trade a currency when risk sentiment is turning in the same direction as central bank sentiment.
si hoc legere scis nimium eruditionis habes
  • #3
  • Apr 26, 2020 6:39am Apr 26, 2020 6:39am
I respect your intentions with this project Custos but I'm going to post concerning a cross-wise view of assessing sentiment.

Firstly, I too believe sentiment is important. But why? Because it can indicate price direction. So if price does not move, is knowing the underlying sentiment still important? Not to me, I'm only trading short-term moves (7 hours to about 6 days). I don't want to be in a pair whose price is static.

Secondly, I'm not an economist and I don't know much about economics. So I can't reliably and accurately judge the impact of different economic data and information. But I can see how the big banks judge the data because if they get involved in buying or selling, the price moves, and they are much better at economics than I am.

So I get my market sentiment assessment purely from the charts. Price is the only information about which there cannot be any debate.
  • #4
  • Apr 27, 2020 3:02pm Apr 27, 2020 3:02pm
Quoting tomorton
I respect your intentions with this project Custos but I'm going to post concerning a cross-wise view of assessing sentiment. Firstly, I too believe sentiment is important. But why? Because it can indicate price direction. So if price does not move, is knowing the underlying sentiment still important? Not to me, I'm only trading short-term moves (7 hours to about 6 days). I don't want to be in a pair whose price is static. Secondly, I'm not an economist and I don't know much about economics. So I can't reliably and accurately judge the impact of...
The issue I see with that approach is that price is only the result of fears, hopes and actions that were taken in the real world, no matter which asset you trade or invest in. To be able to invest successfully long-term you need to identify the data generating process (i.e. causal structure in the real world that leads to price movements).

Unfortunately, very often the price of today is not an indicator for the price tomorrow (except that it will probably be near to the price of today). Of course there are always exception to the rule, but these events are very rare when price movement leads price movement (as in a panic).

Having said that, I don't know your approach, so wish you all the success!
  • #5
  • Apr 27, 2020 3:04pm Apr 27, 2020 3:04pm
Quoting numbnuts
Hello Custos, It's nice to see you here again. I find that different assets respond to different measures of sentiment. COT report is my favourite sentiment indicator for commodities, but not currencies. For currencies I follow whatever economic indicator the relevant central bank has said it is currently watching. If the central bank of a particular country has been talking about employment, I watch employment numbers for that country. If the CB has been talking about inflation, I watch inflation numbers for that country. Risk sentiment has a more...
Hi numbnuts, thanks for explaining your approach. I agree, it is important to look at things that other people are also looking at.
  • #6
  • Apr 27, 2020 3:38pm Apr 27, 2020 3:38pm
Quoting Custos
{quote} The issue I see with that approach is that price is only the result of fears, hopes and actions that were taken in the real world, no matter which asset you trade or invest in. To be able to invest successfully long-term you need to identify the data generating process (i.e. causal structure in the real world that leads to price movements). Unfortunately, very often the price of today is not an indicator for the price tomorrow (except that it will probably be near to the price of today). Of course there are always exception to the rule,...

I agree, price is the result of external issues affecting the decisions by big banks to buy or sell: I do believe that fundamentals largely drive price.

But at the heart of what I'm saying is that if they decide to not do anything to affect price, then it is academic what were the issues in their decision-making process. Knowing more and more about their decision-making process will not bring the trader any profit because the banks are not moving price.

If the banks make a decision to buy, then this will be visible in price rises. Its impossible to know with any reliability that the big banks have today decided they will one day soon start to buy something but have decided not to buy it yet. The only evidence we need as to their decision is the fingerprints they leave on the price charts.
  • #7
  • Apr 28, 2020 3:44am Apr 28, 2020 3:44am
Quoting tomorton
{quote} I agree, price is the result of external issues affecting the decisions by big banks to buy or sell: I do believe that fundamentals largely drive price. But at the heart of what I'm saying is that if they decide to not do anything to affect price, then it is academic what were the issues in their decision-making process. Knowing more and more about their decision-making process will not bring the trader any profit because the banks are not moving price. If the banks make a decision to buy, then this will be visible in price rises. Its impossible...
Let's agree to disagree
  • #8
  • Apr 28, 2020 6:12am Apr 28, 2020 6:12am
Hi,
I respect all of your intention, but i think fundamental and sentiment both are important. In fundamental analysis we need to know current economic conditions of the country, country employment number, daily production report, news, etc. I know we all are not economist, but For the sake of our successful trading you need to know all.

Sentiment in more than important, price where can stop and where will high, where will low, we need to guess what will happen. With your mind, experience and help with fundamental analysis you need to set your sentiments. Nobody know what will happen in future. But Thinking and guessing lead to many ideas.

Thank you..
  • #9
  • Apr 28, 2020 6:23am Apr 28, 2020 6:23am
Quoting Custos
Hi, I am just brainstorming where one could get sentiment from. Do you guys have any other ideas?
//-----

in forex, oanda has it's client order book type indicators...... not sure of it's value......


you didn't mention exactly what sentiment..... so here's some valuable, at least to me, in the stock world.......

wilshire 5000 is a pretty good gauge.....

indicators like put/call ratio and rydex asset ratios are helpful.....

aaii investor sentiment survey.....

there's half a dozen at least standard chart indicators like the trin index, advancing/declining volume, new highs/new lows and so on.......

if buying or selling can be translated into sentiment, full markets heat maps are interesting ...... slide the date back to 2/18/2020 2/19/2020.....

several other sources come to mind.... most with a price tag......h
to trade and code, keep both simple... no call to impress....h
  • #10
  • Last Post: Apr 28, 2020 6:49am Apr 28, 2020 6:49am
Quoting hayseed
{quote} //----- in forex, oanda has it's client order book type indicators...... not sure of it's value...... you didn't mention exactly what sentiment..... so here's some valuable, at least to me, in the stock world....... wilshire 5000 is a pretty good gauge..... indicators like put/call ratio and rydex asset ratios are helpful..... aaii...
thanks hayseed
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