I just noticed that many people still don’t understand Market Sentiment—the true market mood—which affects our trading far more than we think.

Just think about it: when the stock market is falling, gold prices often rise. Why is that? Because investors are afraid of losing money, so they choose to park their money in safer assets instead. This is what sentiment means—people’s feelings and confidence in the market that drive price movements.

Market sentiment is the combination of fear, hope, and greed among a group of investors over a certain period of time. It can create both a Bear Market and a Bull Market. If we understand the market’s state of mind, we can read the trend more accurately.

There are many ways to analyze sentiment. The first one you need to know is VIX, or the “fear index.” It indicates market volatility. When VIX rises, it shows that the market is panicking, which often marks the bottom. On the other hand, when VIX falls, it shows that the market is more confident—although it may be nearing the peak.

Another important tool is the High-Low Index, which looks at how many stocks are making highs or lows over the past 52 weeks. If the value is below 30, the market is in a downtrend. If it’s above 70, the market is rising strongly.

There’s also the Bullish Percent Index, which shows how many stocks are in an uptrend. If BPI is higher than 80%, it indicates the market is overly confident—possibly at a top. If it’s lower than 20%, it means selling pressure is too strong, which could be a buying opportunity.

Besides technical indicators, tracking online news is also extremely important. Do you remember the cryptocurrency trend in 2021? People talked about it as an investment for the future—FOMO spread rapidly. But once negative news came out, the market collapsed. That’s the power of sentiment, which truly affects prices.

Why do we need to understand this? Because it helps us predict trends more effectively—knowing whether the market is about to go up or down, and finding the right timing to generate profits. But don’t forget: sentiment analysis should come together with technical analysis. You shouldn’t rely on market sentiment alone.

In summary, Market Sentiment is the market’s collective psychology. It drives prices as much as fundamental factors do. If we understand what sentiment means—people’s feelings and confidence—within the trading group, we can trade with much more awareness.