Sentiment analysis

Beginner Questions
1

explain sentiment analysis in the simplest words, pleaseeeeeeeeeee

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Sentiment - a view or opinion that is held or expressed

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When traders use sentiment analysis in Forex trading, they rely on computers to analyze data and algorithms that help them understand how other traders feel about a specific currency pair. By looking at the collective sentiment of the market, traders can make more informed decisions about when to buy or sell a currency. For instance, if the sentiment analysis shows that most traders are optimistic about a particular currency pair, traders may decide to buy it, hoping to profit from a possible price increase. In other words, sentiment analysis provides traders with valuable information that can help them navigate the market more effectively.

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4

Many brokers display the percentage of their clients with open positions who are long or short on a particular forex pair. Generally you will see that if a pair is in an uptrend the majority of private retail traders with open positions on that pair are short.

Note that the broker sin the UK and EU also display the percentage of their active clients who are losing money from their accounts. This is commonly a majority, 70-80%.

Which does kind of imply that if you do what the majority do, you will lose, like the majority do.

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5

This is from the school of pipsology.

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In trading, sentiment analysis is like taking the temperature of the market to see if people feel positive or negative about a particular financial asset. Traders use this information to decide if they should buy or sell that asset.

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7

I think it’s something relating to psychology or mindset but I can be wrong.

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From Forexpedia:

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9

I never thought about it. That is absolutely riiiiiiiiiight.
If I do what the majority do, I will lose. I couldn’t agree more.

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10

I read that, but it wasn’t entirely clear to me.

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Spot oooooon!

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It seems you are a trader
How much do you rely on sentiment analysis in your work?

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Hmm. :thinking: In the simplest words, I would say it’s having a feel for the market and trying to gauge the position of other traders. :thinking:

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14

Is it reliable?

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Hmm. :thinking: When you don’t use it on its own. :open_mouth: I would highly suggest doing sentiment analysis with technical analysis rather than rely on it on its own. :blush:

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Sentiment analysis means looking at how traders feel about a particular currency or financial instrument to determine if they are generally optimistic or pessimistic. It can help traders identify potential trading opportunities based on the overall mood of the market.

I hope this helps.

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17

Great to meet you! I really think your advice can help me out a ton.

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18

Awww. :blush: Same goes for me! :blush: I’m always excited to have people here who are just as curious and interested as I was when I was starting out! :blush: Good luuuuck! I will be cheering for you. :blush:

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Thank you so much for your kind words and support! It means a lot to me. I’m really grateful to have the opportunity to learn from someone as knowledgeable and enthusiastic as you. I’m excited to see where this journey takes me, and I’ll definitely keep you updated on my progress. Thanks again for everything!

20

So, you know how sometimes you read something online and you’re not sure if the person is happy, sad, or just neutral? Well, sentiment analysis helps figure that out! It’s a way for computers to look at words and phrases and decide whether they are expressing positive, negative, or neutral feelings. This can be super helpful for understanding how people feel about stuff like products, brands, or even just general topics. Hope that helps!

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