Ziwox sentiment module

About retail traders

There are on average almost $4 billion of forex spot transactions on a daily basis.

With analysis of brokers, reports include data from over 6000 traders across the globe as well as insights and predictions from our leading traders, It shows us statistically, 85%-95% of Forex retail traders do not succeed in their trades.

Unfortunately, one of the main reasons for this loss, is that the majority of retail traders, are trend fighters and take positions against the market trend. this appears to be human nature more than logic as this pattern continues to play out. And These traders attempt to call tops and bottoms in the market by trading reversals in strong trending markets. This goes completely against the fundamental concept of, The trend is your friend.

The trend momentum will benefit too when the traders that are against the trend exit from the market.
You can see the correlation between this data with price changing and real market sentiment below for USDJPY as an example.

What is our Retail traders indicator:

The Retail Traders indicator is one of the Ziwox terminal components that shows the confrontation ratio between buyers and sellers collected from millions of traders over the forex, CFTC market. It can be used as a market sentiment that determines the buy and sell position across a range of assets. Essentially, it shows where the majority of traders are positioned and how much in the percentage they are going long and short.

This sentiment is a contrarian indicator, Because, As we talk about it at the first of this article,  The majority of retail traders are trend fighters and take positions against the market trend, and given that 85% of traders, trade wrong, So to use this sentiment, look for markets exhibiting extremes in positioning. Strong up-trend or down-trend momentum combined with extreme net-short or net-long retail traders positioning, results in a bullish/bearish signal.

Tips for use:
  • Use it only for Medium-term decisions/trades
  • This Indicator can show you trades direction
  • Determine when the traders are in a trend fight
  • This indicator is not your trade signal singly. use it as a confirmation of your decision
  • About 90% of traders lose their money in the market. Therefore, trading in the opposite direction from most traders can be profitable.
  • Don’t trade when the Long and Short ratios are close to each other. (Log or short position between 40% and 60% )
  • If most retail traders expect to drop in the price of an asset, you should consider a long position, and conversely for long expecting you should look for a short opportunity 
BUY confirmation:
  • Retail traders Indicator gives you BUY confirmation when you are in the Strong up-trend with most retail traders in the short positions
  • Technical trend shows long-trend, But more than 60% of retail traders are in short
SELL confirmation:
  • You have a SELL confirmation when you are in the Strong Dow-trend with most retail traders are in the Log positions
  • Trend is Sell, But more than 60% of retail traders are in Long