In this blog this guy is talking about data mining analysis of market sentiment. He does not disclose the exact methodology but it is OK. I just wanted to see what he did.
I remember when for the first time I got started trading I had a strange idea. I used google news and I started to compare the key words. For example I compared the results between: buy stock and sell stock.
What a surprise when I started to plot Excel diagrams I started to observe correlation between the indexes and those tables. I thaugh I was crazy and I stopped doing that because maybe that some kind of self illusion. Until the recent months I realized that other were doing the same thing with other means.
I am very interested in information that is market related and can be quantified but is not in the chart.
Comments
Well, you are definitely on to something there.
First, do you know what happened to the guy and his MSI ?
Second, looking at the buy/sell orders @ Oanda, and knowing the ideas of supply/demand from Sam Seiden's teachings, one can easily see the important levels on a chart; and taking advantage of them.
And frankly, that's all we need. I know it's easy to say such a thing, but having watched price behaviour for a good while now, it all boils down to this: seeing the levels where the big players will enter. See image, and compare with Oanda.
Here it is:
http://www.screencast.com/users/TSWedege/folders/Default/media/e6051e8a-1bb2-47ed-9b8a-5e2c0dd890b2
and the Sentiment index at FXCM for example
http://www.dailyfx.com/technical_analysis/sentiment/
In fact what a friend of mine told me. Look for a break - out for an important level. The market will give you 7 pips whatever the break - out is. He looks to do that on 3 pairs once a day and that is all.
A serious argument will be to analyse this in a statistical way. Is it true?
I will write about this kind of stuff. But it merits a separate group. It is about how to use the heteroskedasticity of the price to take small pips here and there. My friend uses a proprietary indicator, but I can share the idea, in fact this is one of the oldest tricks of the traders.
However I want separate strategies because I do not want to put all the eggs in the same basket.