Consensus in investing is a measure of how in line investor beliefs are with one another. It describes strong trends in both trading and investor sentiment, often manifesting as bullish or bearish outlooks on a security or market.
Bullish or bearish outlooks can be misleading, however. Opinions are not facts, and the noise of opinions from news sources and pundits can make opinions seem more factual than they are. Many investors require time to develop and form opinions, or form opinions for the wrong reasons, and can succumb to a herd mentality
Consensus can be determined by analyzing strong trading trends and seeing where traders are investing their money. Technical analysis – the process of identifying price ranges, trend momentum, and points of possible reversals via graphical representations of the math behind price movements, examining information to the second or third derivative, and using trial-and-error with formulas, among other techniques – plays a key role in determining consensus without succumbing to emotion.
Some traders, like chartists, specialize in forms of technical analysis. They identify parameters and algorithms that can offer efficient trading signals and profits using technical indicators – charting tools that appear as lines on charts, or as other kinds of graphical information. These indicators can serve as guidelines for buying and selling opportunities.
Technical indicators include oscillators, trading bands, and signal lines. Indicators are meant to make visible what may not be as easily perceived from other data. Combined with moving averages, trade volume information, and standard deviation bands, these can indicate the optimal places to buy and sell.
There are leading indicators which attempt to predict and signal when a new reversal or trend will start, and there are lagging indicators which attempt to confirm that a trend or reversal has begun. These can give investors more confidence and ability to participate in market momentum.
Technical analysis is more popular than ever, and information is more readily and widely available. Now investors can leverage artificial intelligence tools to determine consensus without emotional bias. A.I. from Tickeron can aid traders with trade ideas, help analyze signals to execute advantageous trades, and assist investors with making rational, emotionless, and effective trading decisions.