The video is about the Speculative Sentiment Index (SSI), how it works, and how to use it as a leading indicator to predict price movements in the forex market. SSI is a contrarian indicator that can show accumulated pressure in supply and demand. Trading with a strong trend alongside technical indicators and SSI can increase the probability of success.

Understanding and Implementing the Speculative Sentiment Index in Forex Trading

Introduction

The use of indicators in Forex trading is common, but most indicators are lagging indicators based on historical data. This article focuses on the use of the speculative sentiment index (SSI) as a leading contrarian indicator that provides a predictive outlook for the market.

What is the Speculative Sentiment Index (SSI)?

SSI is the accumulated data from real-time traders with open positions in the market. The data is collected and shared by individual brokers, as there’s no central exchange. The positioning statement in SSI is a measure of the number of traders holding long positions in a currency pair versus the number of traders holding short positions in the same pair. The updates are issued periodically, and they provide traders with statistics like the positioning ratio of long to short, open interest, and the daily change in long and short positions.

How to Use SSI Positioning

The positioning statement of SSI is one of the more utilized aspects of the report. Traders can observe the number of traders long and short in a pair. A minus figure indicates a net short position in the pair, while readings above zero indicate traders are long in the pair. SSI is a leading contrarian indicator because traders intentionally use it to go against the majority of retail traders’ orders.

Why SSI is a Powerful Strategy Enhancer

Applying SSI to a Forex strategy can be a powerful enhancer when done right. It’s one of the few leading indicators that traders have to hand. Even though it’s very accurate when done well, that doesn’t mean it’s always correct. Traders should first locate strong trends and use SSI as an indicator to filter out their strongest setups.

The General Rule for Speculative Sentiment Index

The general rule for SSI is to observe figures greater than +2 or less than -2, in which the trend is also running in agreement with the contrary element of the indicator. In other words, traders should short the market in a downtrend when sentiment is for the buy.

Conclusion

In summary, SSI is a leading contrarian indicator, and traders use it to trade against the majority. The method proves that 95% of traders lose money. SSI can show traders accumulated pressure in terms of supply and demand, and traders should look to trade the anticipated pressure. Technical indicators should be used in collusion with SSI to enter the market at the right time. Trading with a strong trend puts traders at a higher probability of success.