NEW YORK–(BUSINESS WIRE)–
By Kiana Danial
Published: May 2, 2011
Most forex traders use fundamental and technical analysis to try to
predict the direction of the forex markets, and to time their entries
and exits. In the futures market, traders have access to a third tool to
help them accomplish these goals, which provides insight to what the
other traders are thinking—sentiment analysis in the form of positioning
Because the futures market is centralized in exchanges, traders can see
where other traders are positioned in reports such as the CFTC’s weekly
Commitments of Traders report. Unlike the futures markets, the forex
market is largely conducted “over the counter,” meaning that it is
decentralized. This makes it difficult to find comprehensive volume or
open interest data. But DailyFX has taken measures in an attempt to fill
this gap by offering clients access to FXCM
Inc.’s (NYSE: FXCM) proprietary open-interest and positioning data.
The Speculative Sentiment Index (SSI) provides live FXCM clients a
virtually unparalleled view of forex-market sentiment. What’s more, the
SSI is updated twice a day with current information on DailyFX
PLUS. This is in stark contrast to the weekly Commitments of Traders
reports, which only shows data that has been delayed for three days.
DailyFX PLUS is a free signals-and-education website exclusively
available to live FXCM clients.
The SSI reports provide information on how many FXCM accounts are short
or long in each of 8 currency pairs. By following the SSI’s twice-daily
updates, you can see how many traders are entering or exiting the
markets. Many FXCM clients use the SSI as a contrarian indicator, and we
believe that the SSI has been a reliable forecasting tool in the forex
market in the past. Below is the SSI’s success story for the past week,
focusing on EUR/USD, GBP/ USD, and USD/CHF. It should be noted, however,
that past performance does not guarantee future results.
The SSI Diary of Selected Dollar Pairs | April 29, 2011
In the past week, the majority of FXCM accounts have been short the
pair, resulting in an SSI signal for further gains in the euro/dollar.
Price Movement Result: EUR/USD has continually gained all week,
posting 5 straight days of gains, totaling nearly 300 pips. A trader
would have been successful in this instance had they followed the SSI
signal and bought the euro*.
Similar to the euro traders, the majority of the FXCM Pound crowd was in
a short position for the pound/dollar, expecting it to fall. The
Speculative Sentiment Index suggested going against the crowd and being
long the pair all week.
Price Movement Result: The pair surged throughout the week,
breaking above the resistance at 1.6600 on Wednesday, April 27.
Following the SSI signals would have resulted in a successful trade
this week,* but now it may be too late.
There has been a sustained fall in the value of the dollar against the
Swiss Franc and many traders have been net long the pair for almost a
year. Presumably, the thought process might have been that this can’t be
sustained forever, that the USD/CHF had reached a bottom and prices
would turn around soon. However, the SSI has generally been forecasting
more USD/CHF losses, including a sustained losing signal in the past
Price Movement Result: The Swissie has fallen for 8 consecutive
days. The pair was below 0.8700 on (ADD DATE) after establishing an
all-time low at 0.8643 the morning of (ADD DATE). The SSI signal was
correct in this instance, with the USD/CHF having fallen nearly 200
pips this week.*
*Past performance is not indicative of future results.
Given that FXCM is one of the world’s largest non-bank forex brokers,
the SSI boasts access to one of the largest and may be one of the most
representative samples of the broad retail forex market available. The
SSI derives information from over 130,000 active accounts† in over 200
countries. The reports are available free twice a day on DailyFX+
for all FXCM live-account holders. The public can also view a weekly SSI
report on Thursdays on DailyFX.com.
† An Active Account represents an account that has traded at least once
in the previous 12 months. This information was recorded in March 2011.
About FXCM Inc.
Inc. (NYSE: FXCM) is a global online provider of foreign exchange
(forex) trading and related services to retail and institutional
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 through DailyFX.com.
Trading foreign exchange on margin carries a high level of risk and may
not be suitable for all investors. DailyFX has taken reasonable measures
to ensure the accuracy of the content herein, however, does not
guarantee its accuracy, and will not accept liability for any loss or
damage that may arise directly or indirectly from the content and your
use of the charting indicator and EAs herein. In addition, the content
herein, including, but not limited to, the charting indicators and EAs
is provided as general market commentary and does not constitute
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All references to “FXCM” refer to FXCM, Inc. and its consolidated
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