Understanding The Sentiments Of Share Market Liveby Nirav Singhaniya Financial Advisor
The most common question that all financial advisors get asked is “What do you feel about the share market? Will the price of stocks rise or fall in the near future?” The share market, like other major financial markets of the world, is fueled by emotions, giving investors profitable opportunities to trade. This itself showcases the importance of sentiments on the market and highlights the need to combine it with other common measures such as fundamental analysis and technical analysis. Let’s understand the sentiments of the share market.
Things To Know About Sentiments of Share Market Live
Market sentiments are a representation of how traders feel and the present mood of the market. Understanding this allows investors to judge whether the market has a positive or negative feeling about the movement of share prices.
If the market has a positive (optimistic) feeling then it is called a bull market, while the negative (pessimistic) market is stated as a bear market. However, gauging whether the market is bullish or bearish isn’t an easy task. Gauging the sentiments of a market can be a complex process. Even the most superfluous and unexpected change has the potential to reshape the outlook and attitude of the market. Thus, you need have to a bird's eye view to keep yourself informed about the various dynamics of live trading.
How Useful Can Stock Market Live Sentiment Indicators Be?
To simplify the process of analyzing market sentiments, you can use a well-defined indicator. But remember the tools that indicate sentiments of stock market must be used in sync with fundamental and technical analysis for added research. The sentiments of the stock market should not be your only variable to study and judge the trends of the market.
Some of the common indicators that can be used for understanding the sentiments of the financial market are:
- Volatility Index (VI): The volatile index (even referred to as fear index) tracks the live prices and evaluates their volatility. This makes it an amazing tool compared with those that are focused on historic and present sentiment.
- Shares Above/Below Moving Average: The moving average (MA) identifies when a particular stock could break low or high. The total percentage of stocks that are either below or above key MA could help you understand whether the market will witness a significant high or drop down.
- High/Low Sentiment Ratio: A great way to discover whether share market live sentiment is bullish or bearish is by using the high/low sentiment ratio. To achieve this ratio, you must compare the total number of stocks that will reach their highest level in 52 weeks against those that will be at their lowest in the same time period. If you find that the average direction hits the lows then the bearish side will take over, but when the market comes closer to highs the bullish side will be prevalent.
- Bullish Percentage Index: This a good method to determine how bullish the market can be. The index provides a figure and points buy signals, listing various stocks as part of a particular index that was able to generate the buy signal. Under this figure and point, stocks either have a sell or buy signal, making it a clear measure of the sentiment of the stock market live.
Track Share Market Sentiments For Higher Returns
There are several ways to measure sentiments of the market and move ahead smartly even before a major event occurs. Thus, never underestimate the potential of market sentiment, as traders and their perception can drive the highs and lows of any stock. For a better understanding on the sentiments of share market, you can opt for a reliable broker like IndiaNivesh Securities Ltd. who will provide a detailed picture of the psychology of the live market and help you predict where it is heading to.
Created on May 9th 2019 08:15. Viewed 156 times.