Retail sentiment as a contrarian signal: do you trade against it?
Brokers publish the percentage of retail traders long or short, and the contrarian instinct is to fade the crowd. It works until it doesn't — retail is often on the right side of trends — and the signal needs heavy filtering.
What's your experience?
- the sentiment source you watch
- the filters that make it usable
- the time the crowd was right and you weren't
The risk-on risk-off guide frames sentiment in context.
Background: Risk-on, risk-off explained: how market mood moves currencies
When investors feel confident, higher-yielding and commodity currencies tend to rise; when fear takes over, the yen, franc and dollar often gain. How risk sentiment works and how to spot a shift.
What does risk-on mean in forex?
A period when investors are confident and willing to take risk, which tends to lift stocks, higher-yielding currencies and commodity currencies such as the Australian dollar, while the yen and Swiss franc weaken.
Which currencies rise in a risk-off market?
Typically the Japanese yen, the Swiss franc and often the US dollar, as investors look for safety and liquidity.
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