Sentiment indicator - Financial definition
Concise definition of the term sentiment indicator
A sentiment indicator is a metric used in financial markets to gauge investors' overall attitude and emotional outlook towards a particular asset, market, or economy.
Comprehensive definition of the term sentiment indicator
In financial markets, sentiment indicators serve as key tools for assessing investor sentiment, which can influence market behavior and asset prices. These indicators are often derived from surveys, social media sentiment analysis, options market activity, or other data sources to provide insights into market psychology and help traders and investors make informed decisions.
For example, the Investors Intelligence Sentiment Survey measures the sentiment of investment newsletter writers, while the CBOE Volatility Index (VIX) reflects market expectations for future volatility, both serving as sentiment indicators that inform market participants about prevailing market sentiment and potential shifts in investor sentiment.