Spread Betting on Market Sentiment

Tip or Anti-Tip?
Follow the Crowd or Be a Contrarian?


Sentiment Spread Betting

IG publishes client sentiment data, i.e. how clients are trading, and it can be interesting.

Other spread betting companies sometimes publish similar data but the IG client numbers dwarf most firms and so I’m assuming that their data is more representative.

The 4 charts below show the percentage of clients who are long or short.

In this case, looking at the big stock market indices, they are very bearish:

Stock Market Spread Betting on Market Sentiment: 17 October 2017
Taken as of 12pm, 17 October 2017


Notes on the Sentiment Data

  • infoAt least 500 IG account holders have an open position on the above markets (this isn’t always the case with IG sentient)
  • infoIG update the data every 15 minute
  • infoCalculated to the nearest 1%
  • infoThe data doesn’t take into account the stake size i.e. the net position


How to Spread Bet on Trader Sentiment?

It’s tempting to be a contrarian and buy.

If 80% of spread bettors lose and they are going short then it’s tempting to open a couple of small spread bets in the other direction.

If so potentially buy the DAX, S&P 500 and FTSE 100, i.e. a few trades to even out any local fluctuations. I’d rather take the S&P 500 than the Dow because it has far more companies.

Right now I will sit on my hands.

If there’s a dip, e.g. with the FTSE 100 dropping to 7,200 like it did in mid-September then it will be interesting to check the IG client positions and buy in.

Having said that, that’s a trade l like anyway, irrespective of client sentiment.

If there’s a big correction, then that’s a different kettle of fish.


AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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