Market Sentiment and Positioning
Financial Market Sentiment Markets are often driven by emotion, rather than economics. Find out more with this lesson. In this lesson you will learn: Why market sentiment could play an important role in trading How to measure the sentiment What could we know from the positioning data Although prices of assets depend mainly on fundamental and technical factors they can be also influence by market sentiment. In fact, markets are largely driven by emotion, and sentiment can be reflecte in prices. For example, the market reacted with nervousness to a Donald Trump win in the US presidential election of 2016. While the majority of polls predicted a victory for Hillary Clinton, the markets entered a state of shock when Trump emerged as the winner. A nervous reaction led to a sell-off of the US dollar and US indices, but as soon as the nerves were calmed, traders started to buy the greenback and stocks. Why? Because Trump’s policy was s...