Introduction
Financial markets are often described using numbers.
Prices rise.
Prices fall.
Indexes advance.
Economic data is released.
Interest rates change.
At first glance, markets appear highly rational and data-driven.
Yet beneath the charts, reports, and statistics lies another important force:
Human emotion.
Participants do not make decisions in a vacuum.
They experience:
- Optimism
- Fear
- Confidence
- Doubt
- Excitement
- Anxiety
- Euphoria
- Panic
These emotions influence expectations, behaviour, and participation.
One way market participants attempt to understand these collective emotional forces is through the concept of market sentiment.
Sentiment does not replace structure.
Sentiment does not replace price.
However, it provides another lens through which recurring market behaviour can be observed and interpreted.
