Market News

Speculative Sentiment Index (SSI) continues to prove to be a reliable forex forecasting tool

Apr 24 2011 22:00:00 GMT
By
Stanimir Zhelev , ForexBrokerz.com Find me on Google+

 

More people are turning to the Speculative Sentiment Index (SSI) as it continues to prove to be a reliable forecasting tool in the forex market. This unique innovation of  FXCM Inc.(NYSE: FXCM) reveals where FXCM’s forex-trading crowd is positioned, helps traders create powerful trading strategies, and provides traders with insight where the market might potentially move.
 
The SSI is available free twice a day onDailyFX+for all FXCM live-account holders. The public can also view a weekly SSI report on Thursdays on DailyFX.com.
 

 

EURUSD, AUDUSD, and USDCAD all attracted great forex-market interest this past week. As of April 22, the AUDUSD was up to a new, all-time high. EURUSD, despite Portugal's debt issues, had broken back above 1.45, and the U.S. dollar hit a three-and-a-half-year low against the loonie.

 

Below is the FXCM’s Speculative Sentiment Index (SSI) diary of the euro, Australian dollar, and Canadian dollar for the week of April 18, and the result on the currency pairs’ price action.

 
EUR/USD
An average of 65% of EUR/USD traders at FXCM shorting the pair. The SSI suggests the majority of the trading crowd is usually wrong, and bases its signals on moving against the crowd.
Result: EUR/USD continually gained. The successful trader would have been the one who had followed the SSI signal and bought the euro.
 
AUD/USD
85% of FXCM AUD/USD traders thought the Aussie was going to fall, and maintained their short positions throughout the week. As a contrarian indicator, the SSI continually suggested going against the crowd and being long the pair.
Result: The AUD/USD hit a new, all-time high, and the successful trader would have been the one who had followed the SSI signal and bought the Australian dollar.
 
USD/CAD
The pair has been falling since mid-March. On average, 85% of FXCM’s traders were speculating on a rise in the USD/CAD, and were longing the pair. Meanwhile, the SSI continually signaled USD/CAD losses.
Result: USD/CAD kept falling, hitting its newest low in three-and-a-half years. If the 85% of those FXCM traders had followed the SSI's consistent signal, and had sold their US dollars against the loonie, they would now be on the right side of the trade.*
 
 
About FXCM Inc.
 
FXCM Inc. (NYSE: FXCM) is a global online provider of foreign exchange (forex) trading and related services to retail and institutional customers worldwide.
 
At the heart of FXCM's client offering is No Dealing Desk forex trading. Clients benefit from FXCM’s large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution, and trading from real-time charts. FXCM's UK subsidiary, Forex Capital Markets Limited, also offers CFD products with no re-quote trading and allows clients to trade forex, oil, gold, silver, and stock indices on one platform.
 
In addition, FXCM offers educational courses on forex trading and provides free news and market research.
 
TAGS: fxcm ssi  fxcm  forex  forex sentiment 

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