FXSSI.Sentiment.Lite Indicator
The market sentiment indicator (SSI) based on information about the ratio of buyers and sellers increases the likelihood of opening a profitable position.
Description
An important criterion for successful trading in the forex market is understanding the Sentiment of its participants: buyers and sellers. There are many ways to analyze the behavior of traders in the market. The most striking examples are technical or fundamental analysis.
But no matter what tools you use in your trading system, in the end you analyze the open positions of market participants.
By default, there is no indicator in the MT5 terminal that displays the ratio between buyers and sellers in an accessible and understandable form.
The free FXSSI Sentiment.Lite indicator can solve this problem.
FXSSI Sentiment Lite Indicator description and its usage features
The Sentiment.Lite indicator displays the percentage of buyers and sellers on the chart of the MT5 terminal. After its activation, the graph will display information in the form of a scale. This scale shows the open positions of forex market participants at the moment.
The blue part of the indicator scale shows the mood of buyers, and the red part shows the mood of sellers. If the blue part of the scale is greater than the red part, then this shows the advantage of open long positions over short ones.
The opposite statement is also true: the larger the red part of the scale, the greater the number of open positions for sale.
The open positions indicator shows the ratio of buyers and sellers, based on data provided by leading brokerage companies. For example, one of its sources is the broker IG Group.
By default, the indicator is automatically updated once an hour. However, if desired, this interval can be reduced to 5 minutes.
The indicator also allows manual updating of data by clicking the mouse button.
To do this, move the cursor over the time indicated on the indicator and click the left mouse button.
After that, the ratio of buyers and sellers along with the time of the current indicator data will be updated.
The indicator can be effectively used by medium-term and intraday traders, as well as scalpers. It depends on how long you hold open positions and what goals you set for them.
By keeping the indicator updated every 5 minutes, when trading on the M1-M5 timeframes, you can “feel the pulse of the market”. This will help you instantly respond to changing buyer-seller ratios.
If your trading system is focused on intraday or medium-term trading, you can combine the use of the sentiment indicator and, for example, support and resistance levels. With its help, you can determine the corrective phase of the market in order to open deals on the resumption of the main trend.
To do this, the indicator data must be updated every 20 minutes – 1 hour. This will help you monitor price action around these levels.
The use of the indicator as an additional trading system element
Round-the-clock activity of the forex market, the number of its participants from intraday traders to central banks, economic news and other factors constantly influence the formation of the asset price.
In such a difficult reality, understanding the ratio of open positions of traders in the market increases the chances of a successful transaction.
The indicator itself does not generate specific trading signals. However, it can indicate potentially interesting entry points if you use it as an additional signal for your trading system.
In the example above, the open positions indicator shows that the number of open sell trades is greater than the number of buy trades – 62% versus 38%, respectively.
However, the current downtrend within an uptrend is nothing more than a correction.
The support level marked with a rectangle on the chart may turn out to be the point of resuming the trend movement in the near future. Stop loss in a potential trade should be placed behind the support level.
Thus, in this situation, the market sentiment indicator helped to determine the corrective phase of the uptrend and a potentially promising point for buying.
Since the indicator is compact and its color scheme is quite pleasant, it will not be too conspicuous. But it will also be easy to find it on the MT5 terminal chart if necessary. As a result, due to its convenient display and efficiency of use, the market sentiment indicator can be useful for both beginners and professional traders.