Sentiment Analysis

Sentiment analysis refers to the study of how emotions and expectations influence financial markets.

Sentiment often drives short-term market moves. 

Sentiment indicators aid in contextualizing prices by determining the state of the market at any particular time.

Tracking sentiment gives traders a forward-looking perspective of the market instead of relying on historical data, which tends to result in hindsight bias.

Traders will use sentiment indicators to figure out the direction of a trade, and then they will use technical indicators or price action to figure out when to enter and exit a trade.