Apart from the much sought after Fundamental and Technical Analysis, there is another analysis which always skips an investors mind while analyzing the market-Market Sentiments. Market Sentiments is basically what all traders feel about a particular market. Every trader will have his own opinion or logical explanation of why the market is acting the way they do. It is immensely subjective and open to interpretation.

Every commodity will govern its own set of market sentiments. These set of sentiments will also affect an investors’ position. For example, if an investor has taken a long position in Crude Oil, then it can be summarized that the respective investor is feeling bullish about the market i.e. the market is going to go up. In contrast, if another investor has taken a short position in crude oil, then it is self-explanatory that the respective trader feels that the market is going to be bearish i.e. the market is going to go down. The ratio for this particular market is 50:50 which means the bulls and bears are at equilibrium and there is no clear investment strategy to be gained from this.

However, in the commodities market; a particular investor represents a mere fraction of the overall market. Even if you truly believe that a particular commodities price is bullish, but everyone else is bearish on it, there’s nothing much you can do about it. As a trader, you could incorporate the market sentiments into your investment strategy; after all it’s what a market represents.

As a trader, gauging about the market feeling is an important indication of where the market is heading. Instead of telling the market what to do, we can profit from the sentimental analysis by trading accordingly. A volume for a particular commodity is a significant representation of what the market is indicating. For example, if a particular commodities prices have been increasing, but the volumes plunging, it may signal that the market is overbought and soon there will be a reversal and vice versa.