Our research strongly suggest that volatility in market psychology correlate to market crashes. In our last post we noted a dramatic jump in SentiTrade’s volatility index (V-SQ). The calculation shows how frequent the market news swing from positive to negative, and back again. Since our last post the DAX lost more than 400 points… Read more

Tags excessive investor pessimism - futures - implicit volatility - market mood - market prediction - meltdown - risk on risk off - V-SQ - volatility calculation

Algorithmic trading, aka algo-, black-box or robo-trading is using automated computer software to create market orders. The computer algorithm decides on timing, price, position sizing and can be executed without human intervention. In recent years, large pension funds and institutional traders have implemented algo-trading to minimize market impact, i.e. divide large trades into smaller orders. Read more

Tags algo trading - algorithmic trading - black box trading - bull bear psychology - confirmation bias - crowd psychology - investor psychology - market prediction - market psychology - risk on risk off - robo trading - sentiment average - sentiment momentum

Since last week the DAX lost about 700 points, same with the DJIA. Could SentiTrade predict that this was about to happen? Our commentary over the last weeks gave plenty of clues and we’re pleased to note that our fully automated momentum strategies followed through. They apply a combination of the concept previously discussed, namely high/low marks from the SentiTrade indicator (trigger points) and momentum calculations of how quickly the sentiment is changing. Read more

Tags dax certificates - dax futures - derivatives trading - market prediction - market reversal - market sentiment - sentiment trigger point - sentiment volatility - system trading

Last week, SentiTrade’s behavioral finance indicator was integrated at Finanztreff.de, one of the most most important German financial news portals. Finanztreff is owned by the vwd group, a leading European provider of customized information, communications and technology solutions for the securities market. It offers innovative solutions for financial service providers, corporates, media and private clients.
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Tags behavioral finance - behavioral finance indicator - crowd psychology - dax futures - dax index - dax options - derivatives trading - excessive investor optimism - excessive investor pessimism - market prediction - market psychology - market sentiment - sentiment analysis

Will the U.S. unemployment numbers rise or fall? What about the ISM Manufacturing Index? The publication of these numbers and the following impact on market psychology have the potential to move the market. What would investors give to know whether the numbers beat or missed analysts expectations? The below graphs illustrate the impact release of ISM numbers had in Europe on the German DAX index.  SentiTrade analyzed the movement of market sentiment (the SentiTrade quotient numbers) prior to known economic events. Read more

Tags market prediction - market psychology - market sentiment - sentiment analysis - sentiment prediction - system trading - trading strategy