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Trading on sentiment indicators

Discussion in 'Investing' started by Jelle, Dec 17, 2018.

  1. Jelle

    Jelle New Member

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    Sentiment is generally accepted as an important factor driving stock prices (eg. However is there anyone investing based on sentiment indicators?

    Currently I have setup tooling that measures sentiment on a daily basis via a chat survey, and for which the results are shared daily (platform is accessible via Telegram).


    Measuring sentiment is one thing, but investing/trading on it is a whole different beast, so I am curious if anyone invests (partly) based on sentiment indicators, and if so, how?
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  2. Three Eyes

    Three Eyes 2018 Stockaholics Contest Winner

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    Is there a place for sentiment for short-term trading when so much of the moment-to-moment, tick-by-tick market action is driven by algorithms?
     
  3. Jelle

    Jelle New Member

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    Yes fair point, though literature suggests some abnormal returns can be generated by using sentiment indicators (Twitter, surveys etc). Also I am thinking in more of a risk-on risk-off type of sentiment investing, so over medium horizon and more in the lines of factor investing (msci also is incorporating sentiment as a factor). This implies less "competition" from algo based trading, and would have sentiment more as a tool on when to enter en exit the market.
     
  4. JerryM

    JerryM Well-Known Member

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    I would suggest that using the MACD and RSI together is as much a sentiment indicator as anything since movement is determined by both price and volume of shares trading up or down at any point in time.
     

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