The Markets’ Mood: How to use it

NapoleonX, the first fully algorithmic, decentralized and scalable crypto-asset manager, has partnered with SESAMm, a French fintech specialized in Big Data and artificial intelligence, to offer you with L’Humeur des marchés (‘The Markets’ Mood’), a revolutionary platform for predictive sentiment and emotions data on financial assets.

If you haven’t done so already, we invite you to read the full article related to the release:

Now that sentiment and emotions analysis are freely accessible on NapoleonX platform for Bitcoin and Ethereum, let’s see how to use it!

A little technique

L’Humeur des Marchés is a data visualization platform providing predictive sentiment and emotions data on financial assets. It focuses on SESAMm’s unique expertise in Big Data, Machine Learning, Natural Language Processing (NLP) and Quantitative Analysis. 
By using NLP, a specific application of Artificial Intelligence focused on textual information, L’Humeur des Marchés performs real-time linguistic analysis in online news, forums, blogs, social media and trading platforms to extract opinion, sentiment and emotions data linked to financial assets.

Technical features include:
Data sets originated from 250,000 sources of data, including social media such as Twitter, social trading platforms such as Stocktwits, news, blogs and forums such as Reddit;
Textual data from 8 languages: English, French, German, Spanish, Portuguese, Italian, Chinese and Japanese;
Mention-based asset analysis with several filters, providing fine grained and accurate results — instead of analyzing an article as whole which would be too coarse-grained, SESAMm’s algortihms analyze each mention in the text, which is especially relevant for long articles providing multiple points of views.
Access to BTC and ETH currencies with NapoleonX partnership;
• One year of live and historical data.

Using L’Humeur des marchés

To access L’Humeur des marchés, visit the NapoleonX platform, go to the “News” tab and then to the “Sentiment Analysis” section.

The tool is organized into three areas corresponding to sentiment, emotion and opinion analysis, each one being available both for Bitcoin and Ethereum.

The Markets’ Mood: sentiment, emotions and opinion for Bitcoin and Ethereum.

Each data set is divided into two sections: “Socials” for indicators extracted from social media sources (social trading platforms and social networking websites), and “News” file for indicators extracted from more traditional sources (financial news, blogs and forums).

Within each file, data & time (UTC+0) as well as volume for each period (number of publications per asset) can be found.

Sentiment

This section will give you a simple overview of market sentiment. Just select a ticker (ETH or BTC) and a source (Social or News) to visualize data instantly. The source is set to “News” by default.

Market sentiment overview: selecting a ticker (asset) and a source.

Sentiment is either positive, negative or neutral with a score ranging from 0 to 1 for each variant. For instance, a score of 0.61 for positive and 0.22 for negative means that 61% of the analyzed sources show positive sentiment while 22% show a negative one — the main expressed overall sentiment is therefore positive.

Mouse over the chart to get a detailed reading of the sentiment scores.

One year of historical data is available for each currency. You can zoom in on a specific period either by entering the dates in the fields provided, or by selecting an interval directly on the graph by holding your click and dragging your mouse until you get the required interval. Repeat the operation to further refine the selected period if needed.

Hold your click and drag your mouse until you get the desired time span.

When hovering over the chart, the cursor shows you the daily volume of sources that have been analyzed. You can also access weekly volume data on the second chart below the first one.

The second graph shows the volume of sources analyzed on a weekly basis.

Emotions

This section will help you visualize the emotions that drive market players and the crypto community.

Five types of emotions are identified: joy, anger, fear, surprise and sadness.

Emotions may vary significantly depending on the sources (Social or News), therefore do not hesitate to switch from one to the other to better understand the markets’ mood.

Market emotions overview: emotions may vary significantly depending on the sources.

As for sentiment, score ranges from 0 to 1. For instance, if several messages or articles aggregated in the same timestamp (i.e. day) have a value of 0.7 for joy and 0.3 for surprise, it means that the main expressed emotion is joy (70%) with some surprise (30%).

Mouse over the chart to get a detailed reading of the scores.

Sentiment and emotions indicators are typically used to forecast market trends or volatility. For exemple, huge values of fear or surprise tend to indicate a future increase in volatility, which you should be careful with in order to preserve your assets. In addition, while a high positive sentiment is usually a good sign for a crypto-asset, you should be careful with increases that are very rapid as they may indicate that a market bubble is likely to appear.

As for the other charts, you can zoom in on a specific period either by entering the dates in the fields provided or by selecting an interval directly on the graph. The weekly volume of analyzed sources is shown on the chart below.

Selecting an interval and looking at the weekly sources volume.

Opinion

This section will give you a trading opinion in the form of a bullish/bearish score. It is only available for social data.

Bullish score ranges from -1 (bearish) to 1 (bullish).

As for the other sections, you can adjust the period displayed either by clicking the corresponding “Zoom” buttons on top of the graph or by selecting the required interval directly on the chart.

A word about sentiment in financial markets

As traders or investors, we all know it is difficult to analyze or to grasp the sentiment on a particular market. This is due to the large number of available informations accessible everywhere, which lead us to believe that such a cutting-edge tool would be of great use to you. The goal is to produce innovative trading crypto strategies relying on this alternative set of data.

While trading on sentiment might prove difficult and unrecommended to be done on this basis alone, conversely, trading while ignoring sentiment and especially extreme movements can be detrimental to your portfolio and your performance.

Diversifying your sources of alpha

L’Humeur des Marchés is here to help you decide on your discretionary trading as a complementary tool to fundamental analysis, technical analysis and quantitative trading signals such as the one we already provide. So use it as an information tool when you make your analysis and before taking any decision. The advantage provided is that it covers all the media you could ever think of in 8 different languages, saving you a lot of time and making you a better-informed investor.

By capturing the markets’ mood, you will be able to more effectively identify and understand the behavioral biases that exist especially in the crypto market, to anticipate trends and to build innovative behavioral investment strategies, thus diversifying your sources of alpha for crypto-assets.

L’Humeur des Marchés will take its natural place on the NPX platform among the features already made available by NapoleonX to retail investors: trading signals for traditional and crypto assets, market data, financial & crypto news, in-depth articles on finance, blockchain and cryptocurrencies.

The Markets’ Mood is provided for free initially for everyone. Depending on the usage and medium-term value, this service might be integrated in one of our membership program (platinum, gold or silver) later on — however we would consider this option only once the first investment vehicle (DAF) has been launched. Don’t wait, try it now!