Probably, i got the date wrong.
Thanks for clarifying
No problem....thanks for responding.
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We are currently seeing Euro shorts 2.1 times long which could signal that the EUR/USD will look to make another push back above 1.500.
Looks like a ton of people are trying to pick the bottom on USD/CHF too. hmmmm, could take EUR/USD higher and USD/CHF lower.
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May I ask for some clarification with that please?
The -1.64 figure for U/E..
-1.64 of what??
Thank You
David
David, It's a ratio of 1.64 traders short to every one trader long. So it's just a ratio of longs to shorts, etc. When they get extreme (+3.0 or -3.0) then that's when it seems everyone is tipped to one side of the boat...and it tends to be great times for someone to look for an opposing technical signal the other way.
In other words...right now, traders are bullish USD/CHF 3 to 1. So they're extremely long the USD/CHF. They're fighting that downtrend and they want to be the first ones to say that they "called the bottom".
The only problem...anytime the masses think they can see a bottom...it's USUALLY not the bottom, and the trend continues onward...blows through their stops and fuels the trend even further.
That's the thought behind the SSI. It's a contrarian indicator. So it's not a trading signal in and of itself but rather a sentiment indicator. When traders get extremely bullishish....then you might look for technical shorting opportunities, etc.
Hope this helps.
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David, It's a ratio of 1.64 traders short to every one trader long. So it's just a ratio of longs to shorts, etc. When they get extreme (+3.0 or -3.0) then that's when it seems everyone is tipped to one side of the boat...and it tends to be great times for someone to look for an opposing technical signal the other way.
In other words...right now, traders are bullish USD/CHF 3 to 1. So they're extremely long the USD/CHF. They're fighting that downtrend and they want to be the first ones to say that they "called the bottom".
The only problem...anytime the masses think they can see a bottom...it's USUALLY not the bottom, and the trend continues onward...blows through their stops and fuels the trend even further.
That's the thought behind the SSI. It's a contrarian indicator. So it's not a trading signal in and of itself but rather a sentiment indicator. When traders get extremely bullishish....then you might look for technical shorting opportunities, etc.
Hope this helps.
Its does Sean and Thank You
I figured it was a ratio on "people quantity" and I presume now by Your reply that it accounts not for "volume" with regard to Trade size at all.
The 3/-3 parameter is useful to know also Thank You!
Its an interesting divergence between the Indicator and FXCM's own factor though.. a surprising difference there.
I figured it was a ratio on "people quantity" and I presume now by Your reply that it accounts not for "volume" with regard to Trade size at all.
The 3/-3 parameter is useful to know also Thank You!
Its an interesting divergence between the Indicator and FXCM's own factor though.. a surprising difference there.
David
Glad that helped. Awesome!
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Sorry if this is a 'dumb' question but where does the data for the SSI index come from? Is it a survey mean/median sample from a population or is it current open market trades.
thank you
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Sorry if this is a 'dumb' question but where does the data for the SSI index come from? Is it a survey mean/median sample from a population or is it current open market trades.
thank you
Great question actually...it comes from the 150,000 accounts at FXCM. It's reflective of the overall net positioning of those clients.
If you think they'll likely be wrong...you use it as a contrarian indicator.
In strong trends, they are usually wrong because ....as much as you try to stress otherwise...retail traders love to attempt to "call a bottom" or "call a top' rather than simply go with the trend.
So in sideways ranges...many times, these guys get it right. In trends, many times they get it wrong...especially in strong trends.
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Today, for instance...while there are no extreme levels like the other day...you can tell that many people are extremely long the dollar by the positioning.
So that's always good to know, generally speaking too.
In ranges, the masses tend to get it right. In sharp, strong trends...they tend to get it wrong.
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SSI is almost 4 to 1 longs....on USD/JPY. So that means they are trying to pick the bottom on the downtrend.
It also means that the downtrend is likely to continue and the support not likely to hold.
When the masses think they see a bottom...it's usually not a bottom.
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Everyone and their mama is trying to pick the bottom on USD/JPY right now.
Hmmmmm, when everyone "sees a bottom"...it's not a bottom.
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I confess Sean to be one of those traders trying to pick those bottoms. After all they are close to support on the monthly charts. Luckily, I scaled out of usdchf when it popped.
A friend sent me this - The vast majority of Forex trading is done interbank - futures account for less than 10% I believe. So one neds to take "sentiment " measures of futrures traders with a grain of salt. The realy big players in FX dont use futures by and large - they do forwards on the cash market with banks.
In other words SSI has a v narrow reference base. Would like to hear your response to this.
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