BTC – Sentiment Zone Oscillator. How do you find it?
Hello Guys!
Today we want to share with you our educational idea.
We are curious what you think of that.
Recently we observed Sentiment Oscillator. It can be useful when measuring general sentiment on the market regarding certain assets.
It gives a good idea of the investors’ approach. It also shows when trend is to be changed from positive to negative and other way round.
How does it work? It is quite simple. It counts how many closed sessions (bars) are green and red.
In other words, how many sessions were closed with a profit and how many with a loss.
When there was a profit obtained, it is marked as a 1 when a loss was obtained it is marked as a -1.
To get the value we calculate EMA (Expotential Moving Average) from all that 1 and -1. EMA put more emphasis on the latest values which makes it quicker to the latest changes.
As the final number is very low (close to 0) it is multiplied by 100 in order to be better visible on the chart.
We also added VWEMA Sentiment Zone Oscillator. This was calculated very similar to the EMA but we also have taken into account volume behind each bar.
Differences are rather small but when reaching top of the top it is marked clearer and may lead to higher income.
A few words about the strategy.
From the visual point of view it is similar to RSI but it is more sensitive and quicker. When the sentiment is very positive it is normal that investors will be willing to take profit and they change their sentiment. Price falls down.
And the opposite – when sentiment is very negative and the price is oversold some other investors may take the opportunity and buy low. Then sentiment changes and price goes up.
You have to be careful as we may encounter many tops and many lows in the row before this indicators changes for good.
For safe trading observe the crossing moment of the indicator through the signal (orange line). Best from the very top to bottom or from very bottom to the top
Did you ever trade with using such indicator?
What do you think about those 2 versions? Which do you prefer?
Once again thank you for being here.
Thank you for all likes, comments. You are really awesome!
WBM Team
Today we want to share with you our educational idea.
We are curious what you think of that.
Recently we observed Sentiment Oscillator. It can be useful when measuring general sentiment on the market regarding certain assets.
It gives a good idea of the investors’ approach. It also shows when trend is to be changed from positive to negative and other way round.
How does it work? It is quite simple. It counts how many closed sessions (bars) are green and red.
In other words, how many sessions were closed with a profit and how many with a loss.
When there was a profit obtained, it is marked as a 1 when a loss was obtained it is marked as a -1.
To get the value we calculate EMA (Expotential Moving Average) from all that 1 and -1. EMA put more emphasis on the latest values which makes it quicker to the latest changes.
As the final number is very low (close to 0) it is multiplied by 100 in order to be better visible on the chart.
We also added VWEMA Sentiment Zone Oscillator. This was calculated very similar to the EMA but we also have taken into account volume behind each bar.
Differences are rather small but when reaching top of the top it is marked clearer and may lead to higher income.
A few words about the strategy.
From the visual point of view it is similar to RSI but it is more sensitive and quicker. When the sentiment is very positive it is normal that investors will be willing to take profit and they change their sentiment. Price falls down.
And the opposite – when sentiment is very negative and the price is oversold some other investors may take the opportunity and buy low. Then sentiment changes and price goes up.
You have to be careful as we may encounter many tops and many lows in the row before this indicators changes for good.
For safe trading observe the crossing moment of the indicator through the signal (orange line). Best from the very top to bottom or from very bottom to the top
Did you ever trade with using such indicator?
What do you think about those 2 versions? Which do you prefer?
Once again thank you for being here.
Thank you for all likes, comments. You are really awesome!
WBM Team
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