You ever hear a song on the radio that makes your memory slip back to a different time? You know, time when your life was far less complicated and probably involved dating or hiking or worries that amounted to what a typical teenager would be concerned about? Then the song causes your memory bank to spit out a series of mini movies from your past. All of them tied together in some way that made the daydream seem right and make sense. After the song ended you wander around for the next few minutes in a mini daze feeling sort of melancholy but still a bit sentimental for those good ole days.
Yeah, it happens to us as well.
Sentiment is one form of Forex trading analysis where your heart tends to get in the way of your head every so often. Oh, that’s not always a bad thing, either. There’s something to be said about using sentiment for trading purposes. It’s not technical by any means but it involves using your gut and hopefully it knows what it is doing.
The Other Side of The Coin
Another big part of sentiment analysis is using your head. Seriously, common sense is your friend in this instance. You can gain a lot of insight by watching what other traders do and how they react to world news or other information. The same goes for the data you collect and charts you follow. While many of these formats offer different pieces of the puzzle, using your head and filtering some of the information you have with logic can be very, very useful.
Believe In Yourself And Your Abilities
There are times when you will just know that something good is going to happen. You’ve experienced that at one time or other during your life, right? Well, the same basic principle plays a role in sentiment analysis. If you truly believe that a position is going to give you some positive outcome, then you have to act on that with your broker. Naturally you will have come to that conclusion after gathering and looking over some kind of data. It’s not like flipping a coin or drawing straws although some days the science behind Forex trading may appear to be just that simple.
One Thing Sentiment Analysis Can’t Do
As much as you may try, you will not be able to sway the Forex market based on your gut feelings, opinions or attitudes about aspects related to the indicators you use for trading decisions. Don’t worry, that’s a good thing. In fact, it’s what keeps Forex so interesting – that governments, banks and corporate entities can’t shift the results. Forex cannot be controlled in any single way. However, world conditions can cause values to change and that is ultimately what you are trying to benefit from – trading against value and sometimes your gut will lead you to a win.
The Best Way To Trade
We have stated this several times and do so because we believe it to be true. The best way to trade is by educating yourself in the best way you can. If it requires extracurricular study outside of the trading arena, then do that. The more you know, the better you will be at Forex trading. There is no other way to say it. Shortcuts will only work for so long. Do yourself a favor and learn as much as you can and maybe sentiment analysis will be part of your education.