IG Client Sentiment: Forex Trader Sentiment

But these reports are most often on a delay, may require expensive licensing fees, and/or give an uneven view of how the majority of traders are actually positioned in a given market. The data suggests about 61% of traders are presently long while the rest are short. The natural assumption would presume the overall sentiment is bullish, but this works in reverse as explained. IG suggests price may continue to fall, concluding bearish sentiment instead. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.

Alongside technical and fundamental analysis, IG’s sentiment data can be a useful additional tool for a trader, if they know how to read the changes in positioning. In the above diagram, price is in a strong downtrend and sentiment is showing over three times more long traders for every short trader, therefore, this can be regarded as a bearish signal. In the above diagram, price is in a strong uptrend and sentiment is showing over three times more short traders for every long trader, therefore, this can be regarded as a bullish signal. Another useful and often overlooked feature of the report is the changes in long and short positions. This feature is particularly helpful to traders when recent moves in sentiment are sizeable and move conversely to the overall sentiment.

  • Using IG’s Client Sentiment tool as a contrarian indicator can be viewed as ‘fading the crowd’ – in other words taking the opposite direction of retail traders.
  • Sentiment returned to ‘normal’ from Janua