What are in finance, what are the sentiment indicators?
sentiment indicators are factors that are sometimes used to identify how investors perceive the market at some point. The purpose of these indicators is to help understand what situations lead to these particular perceptions and what it is likely to happen, when and if these situations should change. For those who study sentiment indicators, it is understood that what investors think is a long way to move the market to a state that is either bull or bear.
One of the main functions of sentiment indicators is the assessment of the psychological impact of various market events on the perception of investors. This, in turn, provides a certain view of what investors are likely to do and how these events will affect the market as a whole. For example, if investors seem to believe that market prices are constantly increasing for a while, they are likely to start buying shares as good investments. If this perception has enough investors and is a bull market.
At the same time, if the sentiment's indicators tend to prove that investors believe that the market is about to undergo a period of time when stock prices will fall, it is likely that it will stimulate the sale of securities that are expected to drop value during this period. When enough investors share this sentiment and start selling shares of various securities, it can create a bear market.
As part of the process of evaluation of perception or investors' sentiments on a given market, many different elements or factors can be used. Some of the sentiment indicators may have to do with investors to change ownership of a large market traded on the market, the expected outcome of the political elections, or even what investors think it will happen on the market when natural disaster seems to be immediate. Others may have to do with what they think investors believe if economistsKA will go through a period of recession or inflation and how this perception affects their purchasing and sales habits.
Investors and others can use sentiment indicators as a means of evaluating upcoming trends on the market and structure their investment activity to maximize their chances of getting their return. For example, if the investor believes that the current sentiment indicators will make others to sell securities in anticipation of the unit price, an investor who believes that the market will recover for a certain period for a certain period, these securities can decide while prices are low. By keeping these securities the bear market phase and finally earning when prices begin to increase again.