How to Read Top Trader Sentiment Indicators
What is Trader Sentiment?
Sentiment measures the aggregate directional bias of top traders in a market. When top traders collectively favor YES, sentiment is bullish. When they favor NO, it's bearish.
How Oddy Calculates Sentiment
Oddy's sentiment indicator combines multiple factors:
- •Position weight: Larger positions count more
- •Trader rank: Higher-ranked traders carry more weight
- •Recency: Recent positions matter more than old ones
The result is a score from -1 (extremely bearish) to +1 (extremely bullish).
Reading the Sentiment Scale
Strong Bullish (+0.6 to +1.0)
Top traders are heavily positioned YES. This signals high conviction in the positive outcome.
What to watch: Is there a catalyst driving this? Or is it based on fundamentals?
Moderate Bullish (+0.2 to +0.6)
Top traders lean YES, but without extreme conviction. Some disagreement exists.
What to watch: Are positions growing or shrinking? Momentum matters.
Neutral (-0.2 to +0.2)
Top traders are split. No clear directional signal.
What to watch: This often precedes big moves. Top traders may be accumulating before showing their hand.
Moderate Bearish (-0.6 to -0.2)
Top traders lean NO. They expect the event won't happen.
What to watch: Contrarian opportunities may exist if sentiment is this negative.
Strong Bearish (-1.0 to -0.6)
Top traders are heavily positioned NO. Strong conviction against the positive outcome.
What to watch: Is the market price reflecting this? A disconnect could signal opportunity.
Sentiment vs. Market Price
When Sentiment Matches Price
If top traders are bullish (+0.5) and YES is trading at $0.65, the market and smart money agree. Less edge here.
When Sentiment Diverges from Price
If top traders are bullish (+0.5) but YES is trading at $0.35, there's a disconnect. Top traders see something the market doesn't.
This is where opportunity lives.
Using Sentiment in Your Strategy
Confirmation Signal
Use sentiment to confirm your own analysis. If you're bullish and top traders agree, that's added confidence.
Contrarian Signal
When sentiment reaches extremes, consider the opposite. Markets overreact, and top traders aren't always right.
Entry Timing
Watch for sentiment shifts. When sentiment flips from neutral to bullish, top traders may be starting to accumulate.
Limitations
Sentiment Can Change Quickly
Top traders adjust positions based on new information. Yesterday's bullish sentiment can flip bearish overnight.
Not All Markets Have Clear Sentiment
In low-volume markets with few top trader positions, sentiment may be noisy or undefined.
Top Traders Aren't Perfect
Even the best traders have losing trades. Sentiment is a signal, not a guarantee.
Conclusion
Sentiment indicators provide a window into what top traders are thinking. Use them alongside your own analysis—not as a replacement for it. The most valuable signals come when sentiment diverges from market price, suggesting an opportunity the crowd hasn't recognized yet.