1. How It Works
A Sentiment Index displays changes in the ratio of traders buying and selling a specific currency for a given period of time. The index is also used to forecast the best time to buy or sell a currency.
This index is a welcome addition to the tools offered by Forex Club, as it gives traders a better understanding of the current market situation in greater detail. Information provided by the Sentiment Index can help answer some of the trader's most important questions:
- What is the current situation on the FOREX market?
- How will the market behave at a future point in time?
- What are the trends at the moment?
- And, most importantly, what positions (Buy or Sell) are most traders taking for a specific currency?
The index’s values ranges from 0 to 100.
- If the number of traders selling a currency increases compared to those buying the currency, the index approaches 0.
- If there are more traders buying a currency than selling it, the index approaches 100.
- The index never reaches either extreme (0 or 100).
Overbought/oversold zones are defined at the 70/30 level.
- If the index reaches 30 or below, the currency has entered the oversold area and a reverse upward trend is very likely.
- Accordingly, the opposite response is likely if the index reaches 70 or above (the overbought zone).
- If the index is in the zone between 30 and 70, fluctuations are considered neutral.
II. Enabling the index in the FXBank
You can enable the index if you have at least $10,000 in your account.
To enable this service, click the Sentiment Index link on the Services tab in FXBank.
If you click the link, a screen with a description of the service and terms and conditions of use will be displayed. If you accept the terms and conditions, select the checkbox "I have read, accept and understand all terms and conditions for use of the index," and then click the Connect button. Access to the index will be available within 24 hours after connection.
Sample screenshot of the index:
III. Enabling the index in Rumus
The Sentiment Index can be displayed in the Rumus trading platform, version 1.5.6 or later.
You can chart the index for any currency pair and for any available time period. Unlike built-in indicators, Sentiment Index are calculated on the server, which is why they are located on the Tools tab instead of the Indicators tab:
At first, the Sentiment Index is not displayed in the list of tools. To make the index available, you must log in to the trading terminal using the account number this service is enabled for. Then you can use index like any other conventional tool. When they are added to the chart, you do not have to specify the underlying data, as they are already calculated for each currency pair.
Sentiment Index is saved in the list of available tools, but they will be in demo mode until you log in to the terminal using your account. Data already saved on the disk will be displayed on charts without authorization at the terminal, but will not be updated.
IV. Desktop with the Sentiment Index
To help traders, we have developed a special desktop that contains four tabs with Sentiment Index for four major currency pairs (EUR/USD, GBP/USD, USD/CHF and USD/JPY).
You can download the desktop here: http://download.fxclub.org/Kayman/Kayman.rmd