As a result, the forex trader can, at any given moment in these markets, detect bullish or bearish sentiment. For example, an ask price of $80 on a particular strike shows that the trader is expecting the price to be above a particular strike price with an 80% probability. This establishes support. To find the equivalent resistance range, the trader wants to locate where there is an 80% probability that the price will not go higher. That would be the strike price with a $20 ask. The result is the ability of the trader to find a sentiment range in real-time. The Nadex bid/ask information is live with no delays.
Oanda now offers a set of trade data that also can be considered a trader diagnostic and behavior tool. For example, Oanda provides a summary of open positions held by its clients. We can see in "Who is doing what?" a snapshot of sentiment at 7:40 am EDT May 2 (there is a 20-minute delay). The crowd is shorting the EUR/USD with 61.46% bearish bias.
Oanda also shows the distribution of open orders. They describe it as, "A snapshot of the trigger points for all open orders held by Oanda clients (limit orders and Stop/Loss or Take/Profit orders on open trades). This information could be interpreted as an indicator of the client price expectations that are contributing to natural resistance and support levels."
"Order book" is divided into quadrants showing whether orders are buy vs. sell, and also whether trigger price points are below or above the market price at the time of the snapshot. The number of orders at each price level is shown as a percentage of the maximum number of all open orders during the past 24 hours.
Traders can use both Nadex and Oanda to obtain unprecedented predictive analytics on what trading direction the crowd is going as well as their expectations. Of course, these clusters or crowds of traders are a sample of the total market and the challenge remains whether to follow or fade the crowd, but knowing what they are up to gives you an edge.
Abe Cofnas is the author of "Sentiment Indicators" (Bloomberg Press). He can be reached at firstname.lastname@example.org.