Let’s talk about the mood of the forex market. In theory the price should reflect all the available information about the market, but unfortunately it is not all so simple. Markets can not reflect all of the information, because in such case all merchants will operate identically. At the same time all traders realize that not everything in the market works as it should. Every trader has their own opinion and an explanation of why the market behaves the way it does. The market is made of hundreds of millions of users who are buy and selling on the market affecting greatly how the market will behave.
Strictly speaking, when we look at the market itself we can observe that it behaves exactly the way all traders are reacting to it. Thoughts and opinions of each trader, expressed in terms of trading, make the market sentiment. The problem is that as a trader you may be 100 percent sure that the market will grow, but you will not be able to move the market in your favor. If the majority of traders believe the opposite – the market will go down, and there’s nothing you can do.
As a trader, you have to take into account not only your opinion but the opinion of other traders. Why do they believe the market will go bearish while you think it is bullish? Of course, you must have an opinion as to how the market is set for a growth or fall. Essentially, you need to decide whether to go with the mood of the market or take trading decisions based on your own trading strategy. At the same time, if you choose to ignore the mood of the forex market – it’s going to be more of a minus than a plus for you.
The ability to measure the mood of the market, will become a very important tool in your future trading arsenal. Do not underestimate it!