The Order Flow Sentiment Index (OFSi) by PsyQuation is a state-of-the-art sentiment indicator that is designed to assist retail traders in gauging the overall feeling or tone of the financial markets and then making profitable trade decisions. The unique feature about this tool is the way it allows traders to use various filters to segment the market sentiment according to a variety of parameters, providing them with deeper market visibility—as opposed to other traditional sentiment tools.
The OFSi sentiment indicator includes data from more than 28,000 live trading accounts and uses three main options to showcase the buy and sell order flow for every financial instrument: trade size and trade volume.
- Trade size: This is the ratio of the number of open buy positions to the total number of open positions in a financial asset. For example, if there are a total of 1,000 open positions on the EUR/USD currency pair and 550 of them are long positions, then the OFSi index is equal to 550 ÷ 1,000 x 100 = 55%. This implies that the OFSi index for short positions is equal to 45%.
- Trade volume: This is the ratio of the number of traders who have experienced positive exposure to a financial instrument. For example, if there are a total of 1,000 traders who have running GBP/USD positions and 600 of them have positive exposure to the currency pair, then the OFSi index is equal to 600 ÷ 1,000 x 100 = 60%.
- No of Traders: This simply counts the number of traders who are buyers or sellers.
PsyQuation offers two choices of how to use the OFSi trading tool: the OFSi Table and the OFSi Chart. You can either use the web version of the tool or download and connect it to your MT4 terminal. While the web version is provided for free, the downloadable version requires a premium PsyQuation account.
The OFSi Table
The OFSi Table is a useful tool that can tell you the extent of buying and selling pressure among the participants in the PsyQuation trading ecosystem. The tool is updated daily in the free version and hourly in the premium version, allowing you to see in a snapshot what is taking place in the market. The extent of the bullish sentiment is indicated using the blue color while the extent of the bearish sentiment is indicated using the red color.
Here is a screenshot of the OFSi Table on the MT4 trading platform:
As you can see on the above image, the OFSi Table applied to MT4 lets you gauge the sentiment of different financial assets easily and fast. With the indicator, you can quickly find out the feeling of the market about your preferred instrument before making a trade decision.
Furthermore, the online version of the OFSi Table comes with added features to ensure you make sound trading decisions.
Here is a screenshot of the web-based OFSi Table:
As you can see on the above image, the web-based OFSi Table has three tabs: Trade No, Trade Size, and No. of Traders.
- Trade No.: This tab gives the sentiment of the number of trades for each financial asset in the market. If you select an asset, a small pop-up will appear indicating the total number of open trades on the asset. For example, highlighting the EUR/USD currency pair reveals that 9,344 trades are currently running with 64.97% and 35.03% of the trades being buy and sell orders respectively.
- Trade Size: This tab gives the sentiment of the trade size of each financial asset, as earlier described.
- No. of Traders: This tab gives the sentiment of the number of traders participating in each instrument (trade volume), as earlier described.
If you click a financial asset displayed on any of the tabs, you’ll be redirected to the OFSi Chart where you’ll get a chart of the asset as well as other details of its sentiment.
You can also click the “DOWNLOAD CSV” button to download the data from each of the tabs and use them for performing further trade analysis.
For example, here is an Excel spreadsheet of some data downloaded from the Trade Size tab.
The OFSi Table Filtering Options
Contrary to other sentiment analysis tools available out there, the web-based OFSi Table gives you the ability to segment the market and find the sentiment according to different categories of trading conditions in the PsyQuation ecosystem. This deeper visibility provides you with an edge to make profitable trading decisions, as opposed to performing sentiment analysis from the typical tools in the market that provides all traders sentiment as one generic pool without segregating the “smart” and “dumb” money.
You can use the table’s default values, or you can deep dive and adjust the parameters to suit your preferences and enhance the ability of the OFSi indicator to generate profitable trading strategies.
Here is a description of the filtering options offered:
1. Time Interval: By default, the OFSi Table provides data according to the daily time interval. If you register for a premium PsyQuation account, you’ll benefit from the option of selecting the hourly time interval.
2. PQ Score: This score ranks the performance of traders using the PsyQuation platform. A trader needs to make a sufficient number of trades before they get a score of their performance.
3. Equity: This option allows you to set the minimum and maximum equity of the trading accounts at the time of opening the positions to be analyzed.
4. Performance: The performance ranking gives a trader’s score relative to the whole PsyQuation community. You can use this option to remove the poor performing traders from the sentiment results.
5. Age: This option allows you to specify the number of months a trading account has been in existence for.
6. DrawDown: You can use this option to set the extent of drawdown you desire. It can assist you in avoiding getting results from accounts that have recorded extensive losses.
After you have completed adjusting the filter options, click the “APPLY FILTERS” button, and the results will be outputted on the OFSi Table, which you can use to discover profitable trading opportunities.
The OFSi Chart
The OFSi chart is somehow similar to the OFSi Table. However, the OFSi Chart displays a chart of the specified financial instrument with a sentiment indicator pane at the lower section of the chart.
Just like the OFSi Table, you have the choice of gauging the market sentiment based on the trade numbers, the trade size, or the number of traders.
Here is a screenshot of the web-based AUD/CAD OFSi Chart:
If you click the “DOWNLOAD CSV” button and download data from any OFSi Chart, you’ll get data of the historical performance of your chosen asset. This way, you can get useful insights into how the asset’s sentiment has been changing over time, allowing you to improve the quality of your analysis.
For example, here is an Excel spreadsheet of some AUD/CAD data downloaded from the No. of Traders tab.
The OFSi Chart Filtering Options
The online OFSi Chart comes with options for choosing the type of financial instrument to display its chart and the time interval (either daily or hourly).
After completing the filtering process, click the “APPLY FILTERS” button, and the changes will be applied to the OFSi Chart.
The PsyQuation OFSi sentiment indicator is a useful trading tool you should add in your traders’ toolbox. The tool provides a comprehensive overview of the happenings in the market, empowering you to take advantage of the information and identify suitable trade opportunities.
With the tool, you can confidently decipher the prevailing market sentiment and determine whether to join the bandwagon or wait your turn. Furthermore, the predefined filters enable you to segment the market and increase the accuracy of your analysis.
You need to try it today! If you have any questions on how to use the versatile OFSi trading tool, feel free to contact our support team.