Understanding Market Sentiment

Every trader will always have an opinion about the market.


“It’s a bear market, Sell everything”

“I’m pretty bullish on the markets we are nearing bottom.”

Each and every trader will have their own personal explanation as to why the market is moving a certain way.

Most of Traders will ask “Kya Lag Raha hai Market” and everyone will start giving his or her opinion.  But sometimes, no matter how convinced a trader is that the markets will move in a particular direction, and no matter how much market is overbought or oversold the trader may still end up losing.

A trader must realize that the overall market is a combination of all the views, ideas and opinions of all the participants in the market. That’s right… EVERYONE.

This combined feeling that market participants have is what we call market sentiment.

It is the dominating emotion or idea that the majority of the market feels best explains the current direction of the market.Always remember market move is the direction of least resistance and can be gauges by reading market sentiments. Major Bottom are formed when doomsday scenario are most taught about and Top when everyone is buying like no tomorrow. Remmber 04 March when RBI made surprise rate cut and Top was made.

Understanding Market Sentiment-Based Approach

As a trader, it is your job to gauge what the market is feeling.

  • Is your trading strategy pointing towards bullish conditions?
  •  Majority of Retail traders bearish or bullish ? We cover in our FII Analysis posted daily.
  • Institutional traders bearish or bullish ? We cover in our FII Analysis posted daily.
  • We can’t tell the market what we think it should do. But what we can do is react in response to what is happening in the markets.

Note that using the market sentiment approach doesn’t give a precise entry and exit for each trade.  Having a sentiment-based approach can help you decide whether you should go with the flow or not. Of course, you can always combine market sentiment analysis with  your trading strategy will help in fine tuning your trades.


  1. Bramesh said:

    thanks !!

    January 13, 2016
  2. Bramesh said:

    sticking to ur strategy helps a lot in trading

    January 13, 2016
  3. ANAND said:

    2 years back one of the trader and and analyst was mentioning the word “market sentiment” which nobody will teach and he was exclusive in knowing it something like that . To me, this one has to gain through some experience only . For this , interaction with a few traders on a daily basis or weekly would help I think .suggestions are welcome please

    January 13, 2016
  4. Hiren said:

    Very well put in words.

    January 12, 2016

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