Speculative Sentiment Index
Hypothetically 70 of 100 sampled net-positioned accounts are long and 30 short. The long share is 70% and the account long/short ratio is 70/30 = 2.33. One large position can reverse the volume-based picture without changing account counts.
The denominator matters
Check whether the provider counts net accounts, all positions or contract units. An account with both sides may be treated differently. Establish observation time, sample and update rules; one broker's percentage does not describe all FX.
Level versus change
70% long today might be up from 55% or down from 90%. Level and change convey different information. Trends can persist with extreme sentiment; losses in a sample do not establish future profits for an observer.
Test the hypothesis
Define threshold, horizon, availability time and entry conditions before testing. Include costs and changes in sample composition. Adding a filter after inspecting results creates a new variant requiring independent evaluation.
FAQ
Does 70% long mean 70% of global capital is long?
No. It is a share under that provider's denominator and sample.
Should I always trade against retail positioning?
No. A contrarian rule needs useful independent evidence; the sentiment observation alone supplies none.
