Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Client sentiment indicator

When trading the financial markets, it can be useful to know what particular assets other investors on the platform are trading. This is where our client sentiment indicator becomes very useful. The trading tool​ reveals the behaviour of other traders of all experience levels, including whether their positions are long or short, their position value, and whether the market that you are looking to trade is in a bullish or bearish phase.

Built-in sentiment trading software can be found on our award-winning platform, which comes with a range of tools and charting features. Client sentiment should be considered as part of your trading strategy, alongside the usual fundamental and technical analysis​ practises. Analysing company fundamentals and price data on candlestick charts could be useful when you are creating a trading plan, and therefore, trading on sentiment can help to reinforce your knowledge of the markets.

Trader sentiment can be applied to all markets, but most notably forex trading and the share market.

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What is market sentiment?

Some traders look for market sentiment when opening a position for a financial instrument, as this can be a good indication of where the market is heading. Market sentiment can vary due to many external factors, such as economic reports, seasonal changes, national and global political events.

As an example, if 80% of clients are going long on the FTSE 100 stock index and only 20% short, this signals a strong uptrend in the market. Other traders may then join the trade if they expect profits to follow.

If this statistic decreases to 60% long positions and 40% short positions within a short timeframe, this signals a change in trader sentiment, and there may possibly be volatility in the market, causing a shift in the asset’s price action​. Traders will then start to decide whether they need to short sell the asset if they are in a falling long position, or buy the asset if they expect the price to start an uptrend.

Client sentiment analysis

Below is a video tutorial of how our client sentiment indicator works within the financial markets. To locate this feature, you will need to register for a live or demo account on our online trading platform​ and locate your instrument within the product library. You can then right click on your chosen asset and select ‘Client Sentiment’. A small box will appear with the market data, where you can filter by the type of client and receive suggestions for the most popular products to trade on our platform.

Please note that this client sentiment feature is available to view on a demo account and is featured on all of our instrument pages; however, if you would like a more detailed analysis, you will need to register for a live account.

How to trade on sentiment

Read more about our charting features​ here, which includes price projection tools, live trading forums, mobile charting and module linking. Our Next Generation trading platform allows you to combine elements of technical analysis to build the most thorough trading strategy.

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Market sentiment indicator for MT4

Some user-generated sentiment trading software can also be found on the international trading platform, MetaTrader 4. Once you have installed the indicator, this will show the percentage ratio of buyers and sellers for particular assets, along with bull and bear market sentiment. This may help traders to avoid opening a losing position, or confirm their positive outlook towards a winning trade. Read more about trading with MT4​ here.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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