Please read the questions I posted in the end of post number 834. I am still waiting for the answers.
Philip, here is how the system works:
-when price is bearish, we look that MA is above price action and they are both heading down. When commercial COT index is under the value 20 then we sell. We only look for bearish signals.
when price is bullish, we look that MA is under price action and they are both heading up. When commercials COT index is above 80 then we buy. We only look for bullish signals.
That is all. The system is easy and shows very good entry point in the trending markets. I find it great. I am just missing the COT index to it Basically it is similar to our system: analysing COT and trade in our bias direction. The only difference is that this gives us the exact points to enter the market and it is a quite quick analysis.
Good job, rookie. I see that you got the point with continuous wins. Yes, with strong vs. weak I try to get an edge. That is the most important. It reduces the probability of losing. And at the same time with such setups you have a lot less stress. In such setups you need two things to lose the trades: the strong currency has to become weak and the weak currency has to become strong. Of course this can also happen, but the probablity to win is better than in strong vs. strong or weak vs. weak setups. And about the bias, yes it is important for me. For this reason I do not enter trades when my fundamental bias is against the COT findings. I do thinkg USD can beat GBP and CAD but these two are just uncertain for me. I do think GBP can make extreme jumps soon. Now in such a situation I only have 50% to win. Where my bias and COT findings lines up, I do think I have more than 50% edge on the market. So I rather leave these currencies to others as I do not want to gample. I like to enter only trades where I am really confident. Still I lose a part of them but at least I do not feel that bad about it. For this reason it happens often that I like some setups of you guys, but I just do not enter the trades because my own fundamental bias is not completely the same. For this reason I am cautios and trade JPY only short-term. Fundamentally I am absolutely bearish but I do not know how much down the COT can still go
Saying that, I am doing also great with this strategy, and this strategy itself brings me nice gains. Still, I have to admit, in the current situation it does not help so much because the exotic currencies are just going into historical highs. What a luck I haveā¦ Exactly when I trade them once they go into historical levelsā¦ Just unbelievableā¦ Once I am out of these I guess I can take a lot nicer setups and gains.
BTW, my CAD/CHF trade was trigered, USD/CHF will probably not get triggered, and AUD/CHF is not certain, we will see.
Well I told you I would tell you when I go in the market. And I did a little bit ago. I was seeing GBP moving on up on the approach to the news (ind. production, man. production, trade bal). So, I scalped. It was during the hour leading up to time. I managed to pull in +26.1 pips. I took that profit at about 15 min before time.
My plan was to recoup what I lost yesterday. Sure there was more pips to be made. But when I seen it level off, I wasnāt gonna push it. Jumped on out. Wanted to see what the news was and the reaction. It was good news but price dropped on down. (probably a lot of profit taking).
So thatās my story.
I wanted to tell you guys that all what you say I take to heart.
Philipā¦wellā¦all of youā¦I do need to be constantly reminded to keep with the (a) plan. And it helps so much to see you all doing that. I just like to ātake opportunitiesā when they come. Not that I ditch my plan, but to have that as an option also. I was just getting a little excited to see the pound start coming up. And that is predominantly my plan. GBP moving up.
Some things Iām always trying to remember through it all alsoā¦
COT bias.
Strong vs. Weak.
Major vs. Comm bias.
So, anyway, thanks for letting me learn from you guys.
first, congrats on your winning! That is always a good feeling and that is the main purpose of trading and doing all the work.
On the other side, IMO you made a big mistake. You wrote:
āMy plan was to recoup what I lost yesterday.ā
You should never do that. It is not an argument to enter the trades to win back what you lost. You enter the market when you get the signal and you exit when you get the signal. Only trading because you want to win back what you lost is very risky. You would lose money with that approach in the long term.
So guys, in 1 hour Carney speaks, that might bring some serious action to GBP pairs if you have some open. As Mike closed his trade with GBP, that might be a good idea for others too.
Congrats on your winning, Mike :44: And no, I donāt think you need reminders. You planned to recoup what you lost, and you did exactly that. I see that you have no problem executing your plan, but I see that you have difficult times dealing with plans that go sour. You may want to focus your attention to that instead.
I can construct a 6 month COT index. The problem I see with this is that it will have a large amount of drawdown. Plus I donāt think it would work with currencies since they are traded in pairs. Do we need an extreme on both pairs in the opposite direction or one is enough? these type of things.
I wouldnāt think of buying/selling unless the Index gets a 0/100 reading by the look of things. Iāll look at the 52 week filter and get back to you.
Very interesting and strangely enough you canāt fault the success rate so far this week. Only 6 out of the 17 trades suggested are losers so far, thatās a 65% win rate.
Also note that based on this strategy you will be looking to sell USD, AUD, CAD and buy EUR, JPY, GBP and so on. What do you guys think?
ok, we really have to look into it. These are basically all extreme values. I write about the system rules in another post.
You do not need an extreme in both pairs as the COT report is based vs. the USD. So if you use USD pairs, then we basically have both currencies involved in it. The same is with other commodities. More info in the next post.
thanks a lot for your involvement in this! You are right, with currencies it is more difficult. Briese actually discussed how it is possible to make a COT index for crosses but it is a lot of work. I think we should stick to the USD currencies, which makes us 7 pairs to trade. Very important that these signals are very rarely, which means most of the times we will not see anything. When we do see, then it is a good opportunity. Drawdown, hmmm yes, you are right. It is larger than usually as these are long-term trades. The reward is however huge. Keep in mind when the MA and COT index both gave a signal, then DD was however not so big. You do not have to do the index if you know any website where it exists. It would have the advantage that we would see it for metals, agricultural products, oil etc. which we can also trade.
As I said, it is some work, but as Williams writes, if you are ready with it once, then it takes 1 minute/week/chart maximum. If we get 1-2 good signals per year, we will get a huge reward for the work! I do not like many systems but this one really makes logic.
That adds to my doubts about the system, I have already gave you 17 signals in one week. Five of which were USD (total seven). Four of the five USD trades were losers even though the index is supposedly designed for them. That also means that 11 out of the 12 crosses were recommended, even though the system isnāt designed for them.
donāt jump into it. There is something not right. Sorry, now I have to leave soon but there is a problem. There are not too many signals. So it is impossible basically to get 17 signals at the same time. You might look at the current trend but not signals. Or there might be a problem with the calculation method of the COT index. I cannot say at this point. Can you maybe share how you calculated the index? 65% is though not bad at all.
If you have the Williams book, please read the pages 150-154. It is described there very well with charts.
COT index according to the book is ((current week net value- lowest low)-(highest high- lowest low)) * 100
Even without calculating we know that Euro for example will be at a 100. Now all we need to see to buy Euro is the value of last weekās 52 MA higher than the previous week. This happened once with EURCAD. It happened six times however with GBP, which is also at 100%. The success rate so far is 85%, but the amount of signals is too high.
ok, I see the light soon, wow you will creat this awesome tool. I think about why we have still too many signals. Can you please post a picture? I would see it on the chart right away. But I do not know if you can put the COT index on your chart.
Wait a second, I might have the problem! We cannot buy the EUR or JPY and not even sell USD I guess. I mean we only trade in the direction of the current trend. I mean we can only short the EUR. When it is at 0%, it is a sell signal, when it gets above 20% and comes under it again, it is another sell signal. You do not sell it every week. It has to be in an extreme, retrace some and go to extreme again to create another signal. Can that be the cause of the problem? When not, then we look further on.
We already gained 20% on the origininal 65% success rate
I suggest to keep testing it another week and see how it fares. Iāll do the index for that as well. I do not have the index on a chart but on excel. What Iād suggest is that since you have the index now, plot the 52 week MA and look for signals and see if you generate the same ones.
The other thing is when you trade the commercials using Williamsā method, the argument is that commercials are ahead of the curve; so since the dollarās COT index generated a sell signal, then we are expecting a fall in the price of the dollar soon. The same applies to the Yen and GBP, the trend for us (based on Williams) is GBP going up and USD moving down. When we filtered the signals out further to currencies at an absolute extreme, the win rate was up to 85%. Thatās why Iād rather wait and see how it fares next week.
But go ahead and look for signals and your own chart, may be Iām doing something wrong there.
ok, then we wait a week. Unfortunately I cannot test the signals, as I do not have the values. That is why I asked if someone knows a website or an indicator by a broker where I can look for. I do my analysis for non-commercials so I cannot make this chart.
As you say, there is no exit signal. That problem have to be solved by ourselves.
I checked the 7 USD pairs. Based on the 52 Weekly MA on the Weekly TF we should be in the following trades: USD/JPY short, USD/CAD long, USD/CHF long and EUR/USD short. The other 3 currencies (AUD, NZD and GBP) do not show a clear trending picture on the weekly TF.
Now looking at your COT index data, we should take away USD/CHF long, EUR/USD short and USD/JPY long as they all suggest buy signals vs. USD which is not confirmed by MA.
This gives us at this very moment one valid trade in my opinion: USD/CAD long. As you gave 1 week COT Index data, it is hard to define the right entry price. But this is the only valid setup I found. Looking at this, it is realistic that we do not get too many signals.
My main question is Williams defines the trend by the movement of the 52 week MA compared to the previous week of the previous 2 weeks. If its higher then bullish, lower then bearish,ā¦etc. Do you use the same method to define a trend?
Notes:
Majors had no down day against any Comm.
AUD was the weakest currency the second day in a row. CAD was the strongest Comm today, NZD was yesterday.
Well guys, does anyone know how EUR, CHF came out on top?
And what has happened to the AUD?
All I can do is shoot out the line ups. You guys need to tell me why.
Thatās an idea. Maybe someone can explain the motivations behind the movements on a daily basis. Well, I usually see that in many of the analystsā write ups. So, Iām just kidding.
I hope you guys are ok. Sorry about AUD. I hope no one got hurt by them.
Iām still not in the market now. Tell you when anything happens.
Wishful thinking - if only we could get your stats earlierā¦ Mike.
Well my AUDNZD went sour. I closed it. Pretty much gave back what I made with my other two trades. One thing that I took from this is that guys we need to be very alert and careful in this and do a lot of reading like Peter does :). Specs really do love speculating donāt they ? So I set up TP and SL and my AUDNZD trade and carried on with my day and in the evening I checked how my trade was doing and it sure wasnāt doing all that great and I had this feeling it will probably soon hit my SL which is far far away. Iām not exactly sure what made NZD to gain against AUD that much. Except for ECB announcement that theyāll be cautious with ABS purchase and is not finalized yet. I donāt know if it even has relevance. I think it does a little. But speculators just went with it. I checked my news calendar there wasnāt any top tier data coming out for AUD and NZD.
Anyway, I just realized we need to be cautious with playing with commdolls that both has high rates. Specs turn the tides in a matter of hours. Change the bias. If I was in EURAUD I think I could kept it going with moderate loss I think.
Basically it is similar to our system: analysing COT and trade in our bias direction. The only difference is that this gives us the exact points to enter the market and it is a quite quick analysis.