Today, I discussed a topic with Gemini: fundamental/emotional aspects vs technical aspects (bare K). The relationship between fundamental/emotional aspects and pure bare K is actually what our system provides. So what exactly is the relationship between them? Suddenly, I realized this seems to revert to a problem that everyone who trades will encounter.
Because I wanted to add a community public opinion system yesterday, which collects the voices of various communities and then extracts, filters, refines, and judges them. As a result, if we want to do this system well, it is very troublesome because it is very complex. For my current small trading system, it is too complicated, so this function is temporarily put on hold. I can only say it is a process that needs to be done slowly and then put up later.
So when we think back on it, we need to consider whether public opinion is more important or pure naked K is more important, because no matter how the voices are, they will ultimately be reflected in the candlestick chart.
Finally, I am very satisfied with the answer given by genimi:
Sentiment is the 'precursor' of candlestick charts.
But why do top hedge funds on Wall Street still spend a lot of money on public opinion data?
1 Time lag (Lagging Indicator): Candlestick charts are usually lagging indicators. When huge negative news is reflected in the candlestick chart (when a big bearish candle drops), it often means that the price has already fallen significantly.
2 Extreme values of sentiment: Candlestick charts are hard to directly tell you whether people in the market are 'extremely greedy' or 'extremely fearful'. However, when there is a lot of cursing in the community and no one is talking, it is often a characteristic of a sentiment bottom. Capturing this extreme sentiment helps us predict the upcoming turning point of the candlestick chart.
3 Liquidity pool: The voices of retail investors represent potential liquidity. When the big players want to sell, there must be retail investors to take over (when the community is extremely excited); when the big players want to accumulate, they must make retail investors give up their bloodied chips (when the community is extremely fearful). Understanding the sentiment of retail investors can help us infer the intentions of the big players.
