COT Report Analysis - a thread on market sentiment

[ForExchange]

I did some research on the internet, at the moment the best free tool for the COT report seems to be cleary on the barchart.com website: Commitments of Traders (COT) Charts - Barchart.com

Besides that, Oanda has some information on their website (we used it earlier), but that is just some very basic information.

I hope this helps a bit.

[ForExchange]

It makes sense what a great buy signal there was in Gold and Silver. Now we are moving back from the COT extreme, must wait patiently until the next signal is going to arrive.

[wisefool]

Hey ForExchange, So I made my own index using excel (in according with Larry Williams’ instructions as well as BBalazs’ from post #1720) and for a couple of markets the index reading exceeds 100 and even negative numbers too. Is this normal or should I double check the formula inputs?

[ForExchange]

Hi wisefool,

You haven´t really said which indicator you are talking about, but anyway it seems like there is a mistake. I do not know any of the indicators where the number is above or below 100/-100.

Let me know if there are further questions.

Which indicators do you use, btw?

FE

[wisefool]

My bad, I’m speaking of the 3 year look-back of the commercials’ net index. I have readings up to 180 on the Yen, and readings as low as -13 on the loonie. I double checked the formula and still can’t seem to find my misstep.

[ForExchange]

Ok, I am not sure then what is wrong. Maybe you can send the excel sheet to me and I can check it. Is it possible to send within BBP mailing? I am not sure if you want to upload to make it public. You decision. I guess we can solve the situation and find the root of the problem.

[ForExchange]

BTW Cot Index shows a buy signal on Silver. Now need confirmation on that one as the setup looks interesting!

[ForExchange]

wisefool, I am not sure if you are here. However if you are, check what a great signal the COT index gave. I posted 16 days ago on silver. Basically it was the absolute bottom!

[ForExchange]

Hi BostonEJ,

Can you please share your current findings on silver? I also drop you an email as I believe there might be some interesting opportunities coming up again.

Thanks,
FE

[Glastonburyk]

Awesome mate I will be bookmarking this thread, very well done.

[chalin_saranga]

nzd pair positive future?

[ForExchange]

Important is to compare it to its historical value, not only if it is positive or negative! Are you updating your database regularly?

[U9917067]

Hi.

I am new here. And is reading about Market sentiment. I can not make the COT indicator at work. I try to put in the code for different currancy pairs. But it fail to reckognise it. I youse MT4. By the way

[MikeWolski]

Hello.
I’m gonna revive this thread.

The COT report is a very helpful tool in determining the sentiment of an asset. And a smart trader would want to know as much as possible about which bias that asset is taking. The context, in which this report gives us clues, would be more suited for the swing and position traders. Meaning, those traders who depend on the longer time frames for the duration of their trades. The daily time frame and higher.

This report can be turned into some kind of market signal to tell you when you should be getting into a trade. Looking at and noticing some extreme positioning by the market participants can yield some good trading opportunities. But these signals are not a usual occurrence. I don’t know…maybe a few times a year you might see something.

But I believe there other primary uses of this data.
This is where I am coming from, and how I particularly view this.

• It’s a macro view of a currency. I approach all of my trading first and foremost by looking at a currency’s aggregate (not pair by pair). A summary. An average. The total sum of all it’s parts (pairs).

• It shows a bias. Kind of like a seesaw. It’s got to be tilting one way or the other. It’s the favored direction in which the big traders are positioning.

• Establishing and keeping track of what that trend is. Eventually watching for trend changes.

This is what I believe is important.
All of this is nothing but information that I deem very important to know before I place my money at risk. It’s getting educated on what’s happening in our market. I believe it’s another piece of the puzzle (very constructive and insightful I might say).

Now. I don’t want to open up a can of worms and have to explain each and every detail about the report. You’re gonna have to do some homework on your own. In fact, that’s the reason why I chose to open this thread back up. Cause in the beginning of it, there’s some very helpful links to get you started.

FE has done a considerable amount of work on the subject. And guess what? It’s all right here for you to read. This is probably the best thread in BabyPips on the subject. You will not find any better explanations, conversations, studies on this stuff.

So again, let me say. If anyone wants to be apart of all this learning, you have to lay the ground work for yourself and get caught up to speed. I would hope most conversations would be revolving around the current sentiment analysis, as opposed to the basic workings of the report.

Now. Given all that. I am gonna talk to you like a new trader. Someone who has never heard of this. Hopefully this will interest you enough to want to uncover some of its benefits, and how you can make it work for yourself.

Let’s look at this. What is the report anyway?

It’s almost like insider information. But the closest we can get to that is knowing what the open interest is. This is in the futures and options market. Not the Forex market. So, when we are looking at our currencies, it’s what’s going on in their market. It’s a clue, that’s all.

Let’s talk about what open interest is. Cause you’re going to see that a lot. Basically, in the futures and options market, a contract requires a buyer and a seller. That’s a closed contract. They have come to an agreement. And the market will be moved, to some degree, when that happens.

But see, that’s not always the case. You can have a lot of buyers come into the market, and also you can have a lot of sellers come into the market. Right? And that’s precisely what open interest is telling you. It tells you how many long contracts there are open, and how many short contracts are open, meaning that their not closed yet. This is what it looks like before an agreement takes place. And remember, that’s counting contracts not transactions. Big difference there. Think about it. Someone could potentially be moving many, many contracts, which is not the same as the amount of transactions taking place. That’ll be much less than the former.

So, you’re going to have :
— Many long positions that have not been settled. Called longs.
— Many short positions that have not been settled. Called shorts.

Open interest is a measure of market activity. When the open interest for the long contracts increase, that means the market participants are watching closely, in order to go long. Same goes for when the open interest for the short contracts increase. That means their watching to go short that asset.

Ok.
This is gonna have to do it for an introduction. Running out of time here for today.
I hope I stirred up some interest (get it).

Anyway. I’ll be back tomorrow with another lesson.
I just plan on explaining the important things that we should be talking about in here.
But go ahead and read some of the very beginning and get a feel for what we’re talking about.

I will continue on with this tomorrow.
Mike

[MikeWolski]

Let’s continue on.

Here’s the BabyPips link.
Commitment of Traders Report - BabyPips.com
Just go through that, and you should get caught up to speed.

But, this is where it all starts.
Commitments of Traders | CFTC

Moreover, where would we go from here?
On the left side column, there’s the Commitment of Traders tab. Inside there you can scroll down and read about the 4 different reports. And the most favored report that we will be dealing with is the Legacy Report. I’m not too sure why we view them over the Traders in Financial Futures, cause you can find the currencies in both. But I’m thinking that following the Commercial and Non Commercial traders is most prudent. Those guys are found in the Legacy report.

As you scroll down further, you’ll be seeing the current reports, per their respective classifications. So, we’ll follow suit as for what BabyPips suggested. Current Legacy Report. Futures Only, for the CME exchange. That’ll give us the most recent raw numbers.

Well, I’m gonna say it.
This can be confusing stuff.
And that’s what my job is going to be here. To simplify the matter, while keeping with the way to track, monitor, and see these currency trend dynamics.

Last time I talked about open interest. There is the total open interest figure. That’ll show you what’s going on in the really big picture. It’s the sum total of all 3 groups (Comms, NonComms, Nonreportables) longs and shorts. You’ll find that if you add up all 3 groups’ longs, that’ll equal all 3 groups’ shorts. So when we talk about the total open interest number, it’s that number. Sure, it’s something to keep in mind and take notice of. But I think the specifics are more telling.
The longs and the shorts.

The longs will tell us how much buying interest there is. And the shorts will likewise tell us how much selling interest there is. Those are some important figures. Absolutely. But see, they don’t mean a whole lot unless you compare them to one another. Think of a seesaw. It’s gonna lean one way or the other. The longs are on one side and the shorts are on the other. Which way will it tilt? Well now we are getting even more closer to what’s most important (I think).

It’s called the net position. Now this is not shown in the report. It’s just common sense. If you have all of the longs on one side of the seesaw, and all of the shorts on the other side of the seesaw, then which way will it tilt towards? That gives us the bias between the two. Right?

And voila. That’s what we really want to know. Of course, knowing how strong that bias is, is very beneficial also. Cause when we keep track of that dynamic, we can therefore get a sense of the trend. Is it increasing or decreasing? Continuing or changing direction?

Now we are getting somewhere.
Look. I’m sure we could come up with many different aspects from the report. But what I’m doing, I believe, is the most simplest. I, surely, am not going to be accused of over analyzing this data. By far. I mean, all I want to do is find out which way the seesaw is tilting? Meaning, which way is the bias? For long or short? And then, to follow up with that with the degree of that. How much of a bias? All put into it’s proper context.

Remember what we’re doing here. This is a sentiment indicator. It’s being able to see how traders are positioning themselves. And when you keep track of that sentiment, watch how it changes, you can get some sort of answers.

Well, what I want to do is show you how I am compiling up these numbers. I’m only dealing with a few of them.

• Total open interest
• Total longs
• Total shorts
• Net position

So, I went ahead and compiled the YTD totals for the 8 currencies I track. Believe me, there’s much information I can gather just by charting those. Let me show you.

The USD.

Self explanatory. Each week shows those 4 things I just mentioned.
What I believe is the most important and telling, of the data, is what’s on the right most column. That’s the Net Positioning. All that is, is the Longs - the Shorts. It’s which way the seesaw tilts, between those two.
— Negative = Bias is bearish.
— Positive = Bias is bullish.

The next most important part of the data, I believe, is the very next column. It’s the red or green column. That is whether the sentiment went either positive or negative since last week. The current weeks Net Position minus last weeks Net Position (all on right column). Basically, did the sentiment get stronger or weaker? Green for yes, it got stronger. Red for no, it got weaker. Look. 11,257 - 7,569 = 3,688.

I guess I forgot to mention a very important thing.
I am following the Non Commercial longs and shorts.

So then, you see my columns of shorts, longs, and then the total open interest. That’ll be the total interest for the Non Comms.

This all gets charted.

Green line is the longs. Red line is the shorts. White line is the Net Positions.

That’s the total open interest.

Well, there’s so much to talk about there. I’m trying to restrain myself. Cause I can go on and on about what it’s all saying. Trust me, there’s a narrative to what’s happening in the market.

I’m running out of time, again.
Well, I guess I got one more day before the very next COT report comes out. And since we all have read and got caught up on everything, we all know that the report comes out on Friday’s. At 3:30 pm ET. We’ll get to see how the market participants were positioned as of Tues of this past week.

But I guess I did end on a good note there. That’s just the USD.
I would like to go through all of the other currencies and give a bit of narrative behind what’s going on. And then when the fresh numbers come out, we can compare and see what kind of changes are taking place. If any.

I would also like to compare this sentiment data to other currency trend indicators.
Basically, are things agreeing with each other?
Are trends continuing or changing?

There is a lot we can talk about.
But I’ll be back tomorrow and try to wrap up all about how I’m doing this.
Also to have a good narrative ready to be compared to the new data that comes out.
Of course I’ll be there when the numbers come out, and show them.
Then whoever wants to chat about all of that, I would be very pleased to talk about it with you.

Mike

[MikeWolski]

Hello again.

So, what do we got…
The COT report will be coming out at 3:30pm ET today. Then what?
Well, this is what we used to do.

Normally, whoever is watching closely (like me) will go to the site. And in whatever fashion it takes, it’ll be nothing but retrieving the numbers and inputting them into your own spreadsheets. That’s all. And then commences the analysis.

I don’t know about you, but I think it’s a great time when they come out. I’m aware of the elephant in the room. But, you got to get passed it. I’m talking about the time delay factor. Us traders know that the market can digest and implement fundamental type of news very fast. I’m talking…very fast. You guys remember the times when Trump would tweet something and the market moved like that? Boy, what a frustrating time we went through, those 4 years. In that respects, yeah, it was very frustrating.

The point here is this. You can’t be quick enough to be on top of a market moving piece of data. Unless you’re a computer and are programmed to act in milliseconds, you can’t compete. Of course, you know that I’m talking about day traders. But the thing of it is, what really moves the market is not the day traders. It’s the big money. It’s the institutions, central banks, etc… that take their time, come in the office at their leisure, and commence their operations of making their money flow according to their plans. Their called the smart money.

I believe that smart money is patient, methodological, purposed, and, well, smart. If they really want the market to be moving in the way they want it to, they have to be tactical in the way to do it. You unload great amounts at the right times. That takes time. Think about it. They are not operating off of emotions, and at every sharp turn the market could take. Have you ever seen a daily candlestick be very long? And then on the very next day, see that daily candlestick turn 180’ right around? Take a guess who’s behind that? Their turn has come and they get their work done.

I believe in this principle.

— The daily time frame is the most important time frame.

There is more to that. On the shorter side of that, you’ll have each of the three sessions working. Asia wakes up and gets to work. They do what they do. You know that they, first, have to know what the US did when they were at work. A lot of times you’ll see they follow suit of what the Americans did. They’ll see where the highs and lows have gone. They take note of that stuff.

Then the Europeans wake up and need to know what the Asians have done. How they have moved their money around. And then they get to work and do what they do. The same goes for the US players. They need to know what’s happened in just the previous session. Meanwhile, everyone knows that there are bias’s of their own respective currency. Whoever is in session, there’s a good chance that their currency will move much more than when it’s not their turn. No one (and I mean no one) moves the GBP more than the Brits themselves.

Anyway, to see a little further out, from the daily time frame, we have the weekly time frame. This is important. Yes, the daily is most important. But seeing what happens in the context of a week is also important. I mean, this is the only time that we have a break in the action (actually, in the Forex, it doesn’t stop but continues on. The brokers all must take the break and then resume at the open. Why do you think there are gaps?) Nevertheless, there’s a break in the action. What happens in a weeks time is crucial in the search of knowing where trends want to do.

You will not find a better context in which to ascertain which direction the market wants to go in. For as difficult it is, and almost impossible, to judge what a true trend is beforehand, this is the best we can get. It will be on the higher time frames. Of course, in hindsight, everybody learns what the trend was. It’s only in hindsight.
Remember that…we’re all genius’s when we look back on it all. But not beforehand.

The daily time frame is most important. Also what happens in a weeks worth of time is just as important.

Now. Let’s bring this back to why we’re here in the first place. The COT report comes out on Friday late. Only an hour and a half before the market closes for the week. And the data that we’re getting then, is what was on Tuesday. I’m not sure if it gets computed on that EOD or what. I don’t know. We just know that this is how every market participant is being positioned, as of that Tues.

Ok. So we get this data like 3 days later. Yeah, bummer, no doubt. But you got to remember what I just told you. We need a little patience. A couple days later, surely, is not going to make such a big difference. At least we’re still dealing with what the market participants were doing in the same week! That’s definitely a plus.

Remember, real trends can last for a very long time. Days, to weeks, to months can go by doing the same old thing. Just take the JPY for an example. This entire year they’ve been sold more than anything. If you were smart, you could have seen all their trend being confirmed by the COT report. And then we have the GBP. Same thing, this year, but being bought up. I’m sure the report would show and confirm their trend as well.

As I have stated, you can use this report for a confirmation of a trend that is taking place. Like a confirmation indicator. Sure. Why not. You just stick with a buying of a currency, or a selling of a currency. And then pick one currency that is biased one way with another currency that is biased the other way. Hence long & short. And that’s what we do here in the Forex market. We’re looking at 2 assets, not one, at the same time. One is going one way and the other is going the other way. In hopes of finding that relatively correct moving direction.

How about using this report as an indicator for a trend change? Trends do change. This is a way to see how it’s changing.

So, you new traders that come along and think this is interesting, you got to keep in mind, in regards to your trading, you’re going to have to realize this can potentially benefit you if you hold onto your trades for longer, not shorter.

Then again, all this can benefit you in a slightly different way (like it does for me). And it’s a way that doesn’t have to do with trading, directly. You’ll find that the older traders (cough Peterma cough) and those who are market smart need to be keenly aware of what’s the current market sentiment is. A lot of those traders will be looking for the big opportunities, in which don’t come around so often. I would like to think of myself as being in this camp. Cause I don’t look at the market for the sole purpose of finding a trading opportunity. I’m curious. I’m fascinated when things move. It’s interesting! It’s not always about making money, it’s our field! It’s what we need to know, what’s going on in it. That’s all.

This is a tool.
Let’s look at some narratives (before we get the latest report that’ll come out soon today).

Explanation of the charts. On each currency there’s 3 lines. A red one, green one and another bigger one. The red and green (thinner ones) are the longs and shorts. The one thicker line is the Net Position. It’s the line that tilts the seesaw in the direction of the bias. And that, of course, will either be for strong (long) or weak (short).

So. I’m gonna give you a quiz. Take a look up there at each one. Just look at the thicker line. That’s the most important one (as I’ve just stated). Which two currencies have been trending higher?

Meaning, their open interest longs have out weighed the open interest shorts.

Meaning, their most current bias should be pointing higher.

• USD
• JPY

All of the other ones are not pointing higher. What does this tell us?
Well, we can call it more of a risk-off sentiment. Risk aversion atmosphere. Although the CHF is not necessarily matching that (cause we know they are a safe haven currency also).

What else can this tell us?
The USD is paving the way, with the JPY following suit (which is a normal dynamic). Maybe just a by product of what the US is doing. So we could simply be seeing the fundamental happenings coming from the US taking precedence in the market. We do possess the worlds reserve currency. So, all I’m saying here, is that the fundamentals could be driving the reason. That’s all.

What does that leave all of the other currencies?
Most of all of them are pointing downwards. With the NZD as the exception.
Look at the Europeans, the top three on the right. I think that’s interesting. Huh?

And then we have the Comms. Bottom three on the right.
The CAD surely has taken a dive. In the context of the entire year, they were at a high plateau place. Well, if you ask me, that seems to be changing.

While I’m here, let’s keep with the CAD. I want to point out these other dynamics that we are looking at. The other lines.

Look at the green line. That’s their open interest longs. What’s been happening here? It’s really have been coming down. What does that really mean? The buyers are not buying anymore. Well, more specifically, the amount of open long contracts have diminished greatly. They did level out for a short time, but now seems like continuing lower.

Sorry. Need to throw it up again (so you can see as I’m writing).
Now, what has been happening to the shorts? Look at the red line.
As the longs have been diminishing for a while, the shorts were diminishing also! How does that happen? Probably the total open interest has been coming down. We’ll take a look at that shortly. But look at the most recent action on the red line. It’s climbed up. Meaning the shorts have been increasing. And that of course will be the main cause of the downward pressure on the currency. So basically, they’ve been getting hit from both sides of the equation. That should indicate a more greater purposeful move.

Let’s look at the total open interest. Any indications here?

Well, we can say that it came off of an extreme that occurred this year.
But then it leveled off.
During that leveling off period, the net positioning did fall off (as we’ve just seen).
That tells me that the amount of activity, for the CAD, is keeping steady. It’s not really falling, or rising either.
I guess I need to put all them together, to see what’s been happening when the open interest was rising all that time during the middle of the year.

Well look. I don’t know. I’m sitting here looking at this and the only thing I can really come up with is that the open interest got so high that it needed to correct. It couldn’t sustain that height. It’s probably something really out of the normal. But that drop is something though, huh?

I guess a further investigation into previous years worth of open interest data would help explain that level (don’t need to tell me twice…I’ll do it).

Anyway.
Let’s talk about something else.

If you look closely enough to how the longs & shorts lines (green, red) are in relation to each other, I think there in lies some clues. Let’s take the NZD for example.

Around week 11 there was a major drop. What caused that? It was the diminished longs. Not an increase of shorts. Know what I mean? There’s a difference.
I would say that the bulls pulled back. Could we say that the bears took over? No way. You can’t say that. But what we can see here is that most of the changes are coming from the bulls. Not the bears. I’m just talking about the difference between those two lines.

Look. I’m not expert. If there is one out there, please, by all means come on in here and do some explaining. I welcome that, whole heartedly.

But continuing to look at the NZD, it will be interesting to see whether that Net Positioning will drop back down. If it does, then guess what? The trend will be continuing. Also to boot, will follow the other Comms on down (if that’ll continue to be the case).

So. Not only is this interesting, but in regards to trading. I don’t know about you, but if I see some NZD Net Positioning turning lower, then I’m gonna keep with my bias of a short NZD. Cause that’s what the trend has been. You can’t argue that. Right?

And on the other hand, if it goes higher, well then, I will be extra careful with them. That’s all.

While I’m here, let’s take a look at the AUD.

When I first look at the chart, this is what I’m thinking.
First, I look at the big line (net positioning one). That is definitely bearish. Has been. Actually, do you realize that it’s in the negative? There is a difference between that residing in the negative territory and the positive territory. I think the difference is, that’s it really has a negative bias. As opposed to being in the positive numbers and heading lower. It would still be considered bearish, but residing in the positive territory.

What else? Well, I see that (keeping with that N.P. figure) it’s at the lowest since the year started. That’s pretty extreme, wouldn’t you say? Maybe not in regards to other previous years, but we’ll have to dig that up sometime.

Now. Take a look at the red and green thin lines. Have you noticed how much they have diverted lately? Like more than at any other time this year so far. Man…this is telling. Let’s be more specific. What’s happening there? The longs (bulls) have been dropping out lower. Little choppily I might say. But look at the shorts (bears). Now that is on the rise, significantly. Presently at the extreme for the year. This is quite high.

Well, I would have to say this is something to be watched. That’s all. In the meantime, we have a short bias going on. When the new data comes out, we just see what more it wants to tell us. I’m trying to give you the narrative of what’s been happening with them. All we want to do is add onto the story.

Will it continue?

By how much?

Any indication of change taking place?

Those are some questions I will be gunning for. It’s the rest of the story.

Let’s move on.
The JPY.

We have the Net Position sitting in the negative territory. No surprises here. Right? But it is turning up. Well, I should say that the last week made a turn higher. They did follow the USD.

Step back and see that this figure started out the year way in the positive. But also note that the bulls were more in demand than the shorts were. The green line was higher than the red line. But of course that changed. The shorts took over and those bears dominated over the bulls.

Look at the green line. That’s the bulls. The amount of bullish open interest wasn’t (hasn’t) been changing a lot. Steady it goes. But don’t look now, but that seems to be rising. It rose up to the 40,000 gridline. It hasn’t been this high for awhile. We’ll just have to see whether that line catches fire and wants to go higher. Also take note of the shorts line (bears). It just started to slant down. That’s one week in a row. Will we get two weeks in a row?

Stay tuned.
I’ll let you know.

The CHF.

We’re looking at the buyers, sellers, and the nets. Green lines, red lines, and the Swiss line respectively.
The Nets have been coming down, the last 3 weeks in a row. And what explains this is that the shorts have been increasing, mostly. Sure, the longs have diminished some, but not by a whole lot. Actually, they’ve seen much, way much more, lower long positioning amounts. So I guess it’ll be the bears who are getting stronger more than the bulls who are getting weaker.

If you ask me, I’ll just blame it on the SNB. That’s all I’m good for with these guys. So I’ll just say that that red line (shorts) are the SNB. Somehow they are able to over power the greedy, safe haven bulls. That’s all.

But realize, also, that the nets are in positive territory. That means something. I think of it more as a bullish bias background, say, that’s on a picture canvass. See how they bounced back up earlier in the year? It’s because the bulls remember way too vividly how they think they belong on higher. And it doesn’t take all that much to make it that way. The green line (the longs) were already elevated up in that territory anyway. I think the SNB just lost their grip.

Anyway. Just remember that we are in the positive, and that needs remembering.

The GBP.

Well, the nets are definitely in the positive. All year. But let’s see, in the last 4 weeks it’s been moving lower. I’m wondering if this is turning into a new trend (from high to low).

Well, what’s the other lines telling us?
The bulls (longs) are way much more than the shorts (bears). It seems like we’re losing the bulls moreso than gaining the bears.
We also need to see (moving forward) whether the shorts (red line) gets up higher than the longs (green line). If so, I would say that the bears would over power the bulls and dominate. See, that’s a dynamic that needs paying attention to.

The EUR.

Same thing here. In the last 4 weeks they’ve been biased lower.
The shorts (red line) have increased way much more than the longs (green line).
It’s all in the positive territory. They’ve (along with the GBP) have been very strong this year so far.

The USD.

This year, moved from negative territory into positive territory. And lately, got a boost majorly.
The longs and the shorts were running quite close to each other. Meaning, no one really is dominating. But look at what happened recently here. The shorts have lost out to the longs. Meaning, those who want to be short the USD sort of gave up. Cause it surely wasn’t the longs who over powered them. The shorts stopped. Gave a breather. Therefore the longs ended up being on top. Which made the net positioning move up higher.

Well, remember, we’re in positive territory. Don’t count out the USD just yet.

I can’t believe the time.
We got 15 minutes till the latest COT report comes out.
Sorry I took so long with all this.
I’ll come back and give some notice of what happened.

Mike

[ForExchange]

Hey Mike,

I am happy you are here again and made the thread live. I have not read your last post yet, but I am on it,

I have a little issue, I checked the first post, none of the links work anymore, I do not understand why. I might PM one of the moderators to find out what is wrong.

I am looking forward to see your next analysis.

FE

[ForExchange]

Hey Mike,

I see peterma gave you a like. It would be amazing if we get him somehow to be active here again.

I must admit my knowledge in the report went down a bit, but the time invested once is not lost as it comes back quickly.

So I have a comment on your post where you mention we follow the “Non Commercials”. Here we need to dig into if we really do it. Non commercials are the trend followers and obviously you want to find the trend.

But you also wrote about smart money and to me it is the Commercials who have the smart money so it is good to be aware what they do.

Now, peterma, it is the time when you should return to us. You know more than any computer and can help us speed up again!

FE

[peterma]

Hi FE,

Mike posted a very well researched update on his journal yesterday - very much worth a read and if I may say so a very professional work.

. My journey journal…from demo to live…and beyond - Trading Discussion / Trade Journals - BabyPips.com Forex Trading Forum

Me - I’m now nearing official age for retirement (14 weeks to go) so taking things a little easier

[MikeWolski]

Hey guys.

Is great to see you again!

Peterma…you’ll always be my hero. But if it’s time to take it easy, then so be it. I’m so jealous. But I’ll always believe that those who have reached that older age will have deserved all the retirement that they can get. I’m so very happy for you. Just keep in touch every now and then. You are loved.

FE…thanks for coming in!
'Bout time.
Let’s get some work done!

Look. I’ll come around on some of the issues you brought up (smart money…Comms). Although I might have used that word in a different connotation, but I’m not against the notion of exploring the Comms’ numbers. Absolutely. I just wanted to start out small.

Well, now that I’m back and am allowed to post something again, I’ll have to show you some interesting stuff I uncovered.

Alright. Here we go.

I was curious. Concerning the currencies. Just how much of a sample are we getting just by looking in the CME part only?

Here’s the site link.
Commitments of Traders | CFTC

Then, if you scroll on down you’re gonna be seeing the different reports. It’s gonna look like this.

And so, as Babypips has shown us (but didn’t explain exactly why), you then would hit the CME one in the Legacy Report (it’s the second one down). Then you would hit the short format. In there is the current figures. Ok. That’s nice. Great.

But I thought…well, are there currencies elsewhere? And if so, what are they saying, also? Think about it. How much of a sample of our currencies are residing there on the CME, is that the total of them? Are there more?

Well, I went down through each and every one of those exchanges. And guess what? The only currency COT data to be found is on the ICE Futures U.S.. (Also on the above TFF Reports. But I’m saving that for last.)

But, the only currency stated there on ICE is the USD Index. And that’s what I use for the USD. But other than that, there are absolutely no currency’s in any other exchange. Ok. That puts my mind to rest on that. Now I know.

But let’s go up above to the Traders in Financial Futures Reports. Yes. In there is the currencies. And I have been going into the Futures Only group. As stated up above that, there’s 4 groups in that.

Well, like I said, I’m curious. And I’m not lazy. I want to know to what extent of the data that I can find on my currencies. So, what classification do you think I would want to look at? Well, if you ask me, I think the second group Asset Manager/Institutional one is most helpful. I mean, that’s us, isn’t it? They trade like we do. And that’s also the reason why I started out going with the NonCommercials, in the Legacy Report. Cause they are speculators, trading like us.

I’m gonna make this a short story. I compiled all this data, in which I’m calling it the A.M. data, and also I compiled the other currency data, in which I’m calling that the NonComms data. I went back, for both groups, from 2019 up to the present (2 1/2 years worth).

This is where it gets interesting. I’m gonna show you all these results.

This year. 3 lines. Green = open longs. Red = open shorts. Solid = net position.
What I think is interesting, in the comparisons.

• The NONCOMMS all have a greater amount of contracts. Basically, many more traders transacting there.

• The USD — the A.M. are decreasing their longs as opposed to the N.C.'s. They have increased their open long contracts.

• The EUR — the N.C.'s shorts seem to be increasing much more than A.M.'s. Also those shorts are almost matching the same amount as the longs. Compare that to the A.M.'s. No comparison (big separation).

• The GBP — the A.M.'s net positions have been in negative territory. The N.C.'s have for the first time entered negative. Also you can see that the A.M.'s shorts have outweighed the longs a few weeks ago. But just this past week did the N.C.'s cross.

I think the question we should be asking here is From hindsight perspective, who ends up being more correct, in following the trend? Or maybe Who should we believe more, if they differ?

Concerning the GBP, I think the A.M.'s data seems to be more predictive. Cause they’ve been negative longer, and at the present time, they are continuing that way. Know what I mean?

Let’s move on to the others.

• The CHF is starkly different. The A.M.'s net positions have been negative all year (hence negative territory). The N.C.'s have been positive all year. What a difference! Now what do you make of that? Know what I think? I think you can make a case for both sentiments. Mostly bullish bias, and a mostly bearish bias. It just depends on how you are looking at it (I know…sounds like a lot of talking out of my butt).

• The JPY N.C.'s have been less bearish than the A.M.'s. Cause the net position line on the bottom doesn’t continue on down lower. The top is. Well, in the second half. I think we need to ask the question of whether the JPY will reach up and over into the positive territory before the year ends. And if so, which group will see it through first?

The Comms.

• The AUD are both showing in negative territory. I’m not seeing a whole lot of difference between the two groups. Maybe the A.M.'s more bearish (cause their longs are not increasing like the N.C.'s are.

• The NZD have differed, in that the A.M.'s net positions are in negative territory, the N.C.'s are in positive territory. That would (should) mean that the A.M.'s are more bearish. Right?

• The CAD are quite similar. Positive territory for both. But the A.M.'s might be more bearish (cause the lines seem to want to cross sooner).

Alright, well, I think this is interesting.
It’s what I’ve uncovered so far.
But FE, you made me think. Therefore I’m gonna investigate into the Commercials.

Looks like I need to make these posts count (get out all that I can on each one or else I will be locked out again).

And BTW…if any new trader out there think this stuff is interesting, or have questions, please feel free to fire away. But remember, this is just a sentiment tool. It’s not a trading tool. It just shows us what’s the feeling and where the positioning is at concerning our currencies.

If you ask me, concerning trading, over the years I’ve learned that you can learn so much more about trading if you just do one thing. Hold onto a trade.

You want to see some profits? Do that.
You want to be in a better position when dealing with when to exit? Do that.
You want less aggravation regarding all of the decision making you have to do? Simplified trading? Do that.

Just remember, this data has to do with the longer standing time frame trades.

Talk to me.
I’m here.

Mike