Sentiment Indicators

M

motcha

What do you think of the validity of sentiment indicators...such as what flipsidetrades.com does? I know I've been told that you should go against what the overall crowd is doing...any thoughts on how effective this might be? I mean if you knew what thousands of people were going to do, since most traders are wrong, would doing the opposit be advantageous? your thoughts?
 
The crowd is wrong at turning points, however, they can be right for long periods of time. My research has suggested that only extremes should be faded. As always, do your own research on both an entry signal and a stop loss plan.
 
Oh...i get it now....a newby spamming his sight....and I thought this might be a serious discussion of sentiment.


so what how do you gauge sentiment? Share with us all!
 
It is spam...but it might be very good spam. I thought of setting something like this up myself, the problem, you need to verify who you are really dealing with.

Professionals will deliberately lie about their positions, is my take.

Data mining will improve trade selection, and help you seperate the heros from the zeros.
 
From what I've read the problem with Sentiment forcasting is that the trading time frames can be all over the board. Example: one trader may be in short term BUY positioin while another is in a longer term SELL position..both can be good posititions but cancel eachother out when looking at sentiment. what I like about this is that the sentiment is all based on the same time frame.
 
The idea of the crowd doing the same is a fantasy. For every 'buy' there is a 'sell' and for every 'sell' there is a 'buy'. Which one belongs to the crowd in any transaction? The buyer or the seller because there is never more sales than there are purchases and vice versa.
:)
 
What is 'the crowd' ?
What one is looking for obviously are undercapitalised, overstretched participants acting collectively on stale information.
Basically, that's the way the level III crowd is looking at the market, and they have the tools to act on it.

The problem is that lacking a level III screen it's hard to differ between short term players, long term players and suicidal maniacs.
Nevertheless it's a good guess that an undercapitalised retail player in a frenzy rather will buy options than sell them, and rather will buy 1 than 500.

So if anyone knows where to come by an odd-lot put-call-ratio, I would be delighted to hear about.
 
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