Why is market sentiment important to traders, and why must it be understood deeply?

Before discussing Market Sentiment — the mood of the market — let’s try to understand it through real-life experience. Imagine that when breaking news comes out that a major stock is reversing, all investors tend to risk moving their money into gold. Conversely, when the market is pleased, stock prices soar. This is exactly what stock sentiment is — a feeling that traders should grasp. It’s like an investment timing that must be caught when the crowd shares the same emotion.

4 Methods to Read Market Sentiment Popular Among Traders

1. The VIX - The Fear Gauge Radar

The VIX itself is an indicator that shows whether the market is feeling anxious or confident. If the VIX line spikes high, it indicates the market is at a low point. When the VIX drops, the market is flying high. Skilled traders often check the VIX before deciding to buy or sell.

2. High-Low Index - Comparing Signals of Stock Crisis

This indicator looks at the highest and lowest points of stocks over 52 weeks. When the value is below 30, it indicates a bear market; when it exceeds 70, it indicates a bull market. Traders often use this with major indices like S&P 500 or Nasdaq 100.

3. Bullish Percent Index - Measuring Buying Power

This sentiment tool shows how many stocks are in an uptrend. If BPI exceeds 80%, it indicates a strong bullish trend. If it’s below 20%, it signals heavy selling pressure.

4. Real-Time Data Monitoring - Listening to the Masses

Modern investors need to follow online news and public opinions. For example, in 2021, cryptocurrencies became a dream-like topic, causing some assets to experience FOMO (Fear of Missing Out). But when negative news emerged, confidence dropped immediately.

Stock Market Sentiment is the Main Profit Generator

Market sentiment arises from herd psychology. When many traders make the same decision, prices change rapidly. Whether it’s rumors, expectations, or specific analyses, when market sentiment shifts, money flows out of stocks into gold or from global stocks into crypto. This is the movement of money driven by crowd feelings.

Not only Thai stocks — this system applies to Forex, international stock markets, and cryptocurrencies. In fact, many profitable traders understand the timing of sentiment shifts. They are not fooled by numbers but are controlled by market psychology.

Why Read Sentiment

Understanding stock sentiment is 50% of the investment game because it allows us to predict whether the market will rise or fall. Catching the right timing to enter or exit can increase profits. But remember, sentiment should not be relied upon alone; it must be combined with technical analysis.

Summary

Now, to conclude — Market Sentiment reflects the collective psychology of the crowd. Most traders and investors respond quickly to news. When stock prices fall, sentiment drops; when prices rise, sentiment increases. Therefore, successful investors often monitor stock sentiment, fundamentals, and technical analysis to make efficient investments and reduce risks.