Sentiment Index - the wisdom of crowds?

Had a look at the IG Client Sentiment matrix on DailyFX.

Interesting. DailyFX say they habitually take the opposite direction to what the majority of IG’s clients are doing.
e.g. 66% of these clients are short AUD/USD: DailyFX are Bullish.

Has anybody been using this information for any time? Is it useful?

[quote=“tommor, post:1, topic:112611”]Has anybody been using this information for any time? Is it useful?
The broker guys on the 16 candles thread & one or two of their colleagues on the original technical templates threads have been extoling the virtues of incorporating the use of (varied) sentiment gauges for years. And yes, it’s certainly valid information within retail houses, especially when assessing the merits of triggering entries in an established momentum cycle, usually via pullbacks, when the majority of punters are looking to build & execute contrary (reversal) positions.

Retailers (still) love to pick tops & bottoms & regale themselves with pretty candle patterns & herds tend to follow herds, which is reflected in the sentiment positions, often at perceived market extremes

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Turns out Oanda offer a free sentiment indicator matrix, updated every 20 minutes on their website. Its pretty good and more comprehensive than DailyFX’s: they currently agree direction on all but one pair.

For what its worth, I have open positions in 3 pairs listed on the Oanda matrix: I’m taking the opposite direction in all three to the majority of their clients with trades open.


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Well that’s certainly true about “The X Factor”.

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Going against the crowd is probably a wise move considering the crowd is wrong 95% of the time.

There is a book by Carl Futia called The Art of Contrarian Trading that deals with this topic.

Looks to me like Oanda’s clients have only two rules - buy the US and sell the EUR. Needless to say I am long EUR and hoping to get longer and short USD and hoping to get shorter. They all seem to be banking on dramatic hero-making reversals.

Oanda’s clients’ top 3 long trades right now are Silver, USD/CHF and USD/CAD.

Their top shorts are GBP/USD, EUR/JPY and EUR/AUD. They have EUR/USD as a short.

For what its worth.

About 37 Kenyan cents.

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How did your trades work out?

Most of my September trades were cleared out at a loss as the EUR weakened and the USD strengthened through the end of the month. Hey ho.

October was much better after I started pyramiding every winner. November will be better again no doubt of that. Onwards and upwards.

I looked into trading with the SSI and watched it for ages, Just like everything else I have found with forex when it works it works, When it doesn’t it doesn’t

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It works really well, except when it doesn’t

So for what its worth the crowd is pushing the price. The price expresses the current market sentiment to the penny. So when we use any indicator it is based off the market sentiment.

Anyway sites like, etc. hove bunched indicators into time frames, I find this very useful and while not gospel they tend to be quite accurate.