#MarketSentimentWatch

SWFX Sentiment Index

Defining the prevailing market sentiment can be a critical factor in making informed trading decisions. The Sentiment Index addresses this need by offering a comprehensive analysis of a variety of data.

What is market sentiment in forex?

In forex trading, market sentiment refers to the overall attitude or feeling of traders towards a particular currency pair or the market as a whole. It reflects the collective mood of traders, whether they are optimistic (bullish sentiment) or pessimistic (bearish sentiment) about future price movements. While market sentiment is a general feeling, tools such as sentiment indices allow you to measure it more precisely.

The Sentiment Index can be a valuable tool for intraday currency trading. The Index is based on transaction flow information and is designed to show long and short ratios in the most popular currencies and currency pairs consolidated by liquidity consumers and providers.

Liquidity consumers are represented by individual clients, brokers, investment companies and hedge funds. The sentiment ratio of this group is the percentage of longs or shorts in the overall amount of open trades, executed by the liquidity consumer. The index also includes liquidity from individual bids and offers of the foregoing participants if it is not provided on a regular basis.

Liquidity providers are represented by centralized marketplaces and a number of banks which continuously provide ask and bid prices on the market. The sentiment ratio of this group is opposite to liquidity consumers data because, for each trade executed through SWFX, there are two equal and offsetting over-the-counter transactions.

The index reflects the distribution of the current market conditions and is updated every 30 minutes.