Sentiment
a.k.a. Market sentiment, Investor sentiment
The overall mood of traders toward a market: optimistic, pessimistic or somewhere in between.
In plain English
The overall mood of traders toward a market: optimistic, pessimistic or somewhere in between.
Sentiment is how the crowd feels. If most traders expect a currency to rise, sentiment is bullish; if they expect a fall, bearish. Moods can drive prices as much as facts do, at least for a while.
Traders measure it with surveys, positioning data like the COT report, broker client-positioning stats and fear gauges. Extreme sentiment is often used as a contrarian signal: if everyone is already bullish, who is left to buy?
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