Algo Trading: Sentiment Ratio

The Sentiment Ratio indicator gauges current Market Sentiment between -100% and 100%, where lower than -40% is considered Bearish and higher than 40% is Bullish. The channel between the two is considered Neutral.

The indicator has been particularly effective on H4 charts when used to confirm the direction of trading system signals. On shorter term charts, when the indicator crosses -40 or 40 back to Neutral, it has been effective when filtering signals for potential swings; for example, a bearish indication when the indicator crossed below 40 and a bullish indication when the indicator crossed above -40.