Retail traders’ sentiment shows retail traders’ long and short positions. It can be used as a sentiment to determine positioning across a range of assets. Essentially, it shows where most traders’ positions are set and what percentage of traders hold buy or sell positions. This sentiment is a contrarian indicator because statistical analysis shows that most retail traders are trend fighters and take positions against the market trend. The trend momentum will benefit too when the traders that are against the trend exit from the market. Strong up-trend momentum combined with extreme net-short retail traders positioning, results in a buy signal. And vice versa, the strong down-trend momentum combined with extreme net-long retail traders positioning, results in a sell signal.
In the Ziwox Terminal, one of the notable features involves collecting retail traders’ ratio in percentage and utilizing it as a reverse indicator within a trading checklist. This approach involves adopting a contrarian stance towards retail sentiment, which means going against the majority sentiment of retail traders. By monitoring the percentage of retail traders holding long or short positions, Ziwox provides traders with valuable insights into market sentiment. This data allows traders to gauge the prevailing sentiment among retail traders and potentially identify market reversals. Through the Ziwox Terminal, traders can effectively integrate this contrarian approach into their trading strategies, helping them make more informed decisions and potentially capitalize on market movements driven by shifts in retail sentiment. By leveraging this feature, traders can enhance their trading strategies and improve their overall trading performance.
