Cayman is a unique indicator that shows the ratio of buyers and sellers in the spot forex market in real time. In other words, it’s a Speculative Sentiment Index that is based on AMarkets proprietary positioning information, that provides an unparalleled view of forex market sentiment.
Cayman Indicator has a range between 0 and 100, where the security is overbought (near 100) or oversold (near zero). It is very important to note, that extreme values of 100 and 0 hardly ever reached, because there are no situations when 100% of people either long or short.
However, this Indicator has its check points of 30 and 70, which are so-called critical levels and shows not only current trend slowdown or correction, but also potential trend reversal.
How to predict the market using Cayman? When Indicator value is above 70, it means that most of the traders are long, therefore we should be looking for the uptrend correction or reversal. When Indicator value is below 30, we should be looking for downtrend correction or reversal.
Keep in mind, that critical levels may vary for different currency pairs. Cayman allows you put historical sentiment data on the currency chart, so you can find the most appropriate critical levels for each currency pair.
Cayman Indicator and MetaTrader 4 widget
The sentiment indicator shows what percentage of traders buy and sell currency. In other words, you will always see who, bulls or bears, dominates the crowd. The Cayman indicator has a fixed range of values from 0 to 100. If the volume of purchases for a specific currency pair increases, it means that most market participants buy up the currency. If sales volumes increase, then the bet is made for correction. It is noteworthy that the extreme values of the range 0 and 100 are almost never reached. The indicator of market sentiment has its own critical values, the so-called extremes. For Cayman, levels 30 and 70 are those. If the percentage of orders opened in one direction reaches critical values, this can be regarded as a powerful signal not only of the trend slowdown and the overdue correction, but also the probability of a trend change. Levels 30 and 70 indicate overbought or oversold markets. If Cayman enters the zone from 0 to 30, this implies that the currency pair has entered the oversold zone – we are waiting for the pair to turn upwards. If Cayman is in the area from 70 to 100, then the currency pair is located in the overbought zone and is preparing to move down. It is very important to remember that the critical levels for different currency pairs are different. If the currency pair has in the past unfolded when the 65% of the number of long positions has been reached, it is most likely that this value is a critical level for it, and it is necessary to monitor the signals of a possible reversal when it reaches it. If another currency pair was deployed only at 90% of the number of long positions, it is necessary to follow the reversal signals precisely when this level is reached.
Cayman Expert Advisor
An automated trading system that is generating trading signals based on market crowd’s behavior, as well as on market overbought/oversold signals. Moving Average is used as an additional trading signal confirmation. Cayman indicator based EA comprises two market indicators, that make it possible to trade along the major market trend, purchase currencies when they oversold and sell them when they are overbought.