Though I’m new to COT I can see how useful this can be to increase probability of our trades. Nothing quite compares to COT report /non commercials/. Thanks for pointing out the differences commercial and non commercial. I almost got lost in vast amount of information. It was overwhelming. All I know is as a spot fx trader we should be focusing on non commercials as they are in it just to speculate as for commercials /in futures/ they might stay in even if their positions are in negative zone.
On GBPJPY dailies I zoomed out and between Jan 2014 - Feb 2014 there was a huge bearish move of about 1000 pips in a span of just about a month. Apparently COT JPY net position was at record high short -143,822 /4th Dec 2013/. Prior this downfall GBPJPY was in an uptrend / GBPJPY usually seems to be in an uptrend with JPY COT net position with - readings most of the time/. GBP COT net non commercials during this period had positive readings + . Now I don’t have long and short figures. Not sure what to make of this. What do you think ? :eek:
If you step back and look at a bigger picture it gives you more clarity. All these dots that we weren’t able to connect up front just seems to make sense from afar. That’s what trading COT is about. The more you realize what actually moves the market /large speculators/ all those fancy indicators all of a sudden feels like nothing more than a combination of false signal providers. I"m not bashing every other indicator out there but by now we all know most of them are nothing but a fallacy.
Yes rookie, the cot is useful only as a guide in FX imo.
The commercials are the ‘instigators’ so to speak in that they need to hedge, with the specs taking up the risk. The picture is even blurred with the fact that dealers who facilitate the hedgers in their transactions can be in the commercial category, so you have, for example, Deutsche Bank making transactions on the commercial side.
Like Williams says it’s not a timing tool, if it was then everyone would be short GBP from months ago.
BTW, didn’t short GBP yesterday, I was lucky - the only thing that stopped me was the high imports last month reported, just caused that little nagging doubt, when in doubt always stay out
Hmmm I took 2 wins on the upside with GBP, then I short vs. JPY and NZD. For some reason JPY is ok and holds steady, the NZD was crashed yesterday and I got stopped out. What a sentiment change in a day!
Today comes out way too many news again so I guess it is better to be careful.
I thought banks were supposed to be on the non commercials side if their sole purpose was to speculate. But being a dealer might enable them to impose charges to hedgers regardless of price fluctuation safe guarding themselves from possible losses due to price fluctuations. So at the end of the day whatever the market condition is they make money as a facilitator.
Not exactly sure how all these work in reality. But banks can play different roles I guess as long as they stay out of taking too much risk or loss opportunity is an opportunity. They have an upper hand when it comes to these kind of deals anyways. Or should we look at both ? The more you delve into something the more complicated it gets especially with fx. Oh wells :30:
Good to hear your trades have been right Forexchange!
If you look at JPY crosses for instance USDJPY and GBPJPY and zoom out to weeklies. These JPY crosses have been in somewhat steady uptrend since the beginning of time no I mean the chart :22: JPY non commercial positions with - readings most of the time while GBP and USD with + readings. So COT net commercial positions definately tells something , the general atmosphere or like Mike says the big picture.
But like peterma mentioned net non commercial positions doesn’t tell you exactly when to get in and ride on those big moves the big guys have started. But if COT net position just serves you as a guide we might just as well trade with fundamentals /general economic conditions and key news releases/ don’t you think ?
Well we can always look at COT report and look out for short and long positions the previous week and decide then. And look for signals with technicals. But is there a way to know a big move prior with COT ? I thought perhaps by looking at historic net non commercials and comparing them might give a clue to if big move was coming but like I said in my earlier post that isn’t seem to be the case. JPY net non commercials were at record high short -143,000 while GBP had + readings but few days later GBP had lost almost 1000 pips in a span of just about a month. againts JPY on dailies.
yes, it gets more and more complicated! Hopefully I get more depth knowledge after reading the two books.
Well I guess there is always a way to know the big move. It depends who you are. If you are a good friend of Yellen or Draghi it might be useful Besides that there are probably many technical analysis to know the big move as well. For me it is probably the fastest to learn the COT report though. But looking at the net non-commercials is probably not the solution. I agree with you. Until we get there I prepair myself for the GBP news now and see how it turn out.
Well, a lot has changed since yesterday. So, this morning, going into the US session now, I’ll give you the strong/weak line up, from the 8hr time frame.
USD and GBP are strongest. Even.
JPY next.
EUR and AUD tied for third.
CHF
NZD and CAD bringing up the rear.
Notes: CAD coming back up from dead last.
NZD fell from grace.
USD moving up!
GBP strong!
EUR moved up slightly.
CHF dropped slightly.
JPY dropped slightly.
AUD really no change.
Of course it is a pitty that banks are registered as swap dealers and not non-commercials (or managed money). I do not really get it why is like this as this way it only makes me harder to interpret the numbers.
The second article is very true, basically all information can be found on the COT website as well.
I just want to emphasize the last paragraph of the article:
“Furthermore, COT readings are not timing signals by any means. Professional futures traders or money managers will tell you that creating a strategy based on COT data without considering price patterns and other market information is, essentially, foolhardy. COT analysis more typically function as a filter for taking trades in one direction or another, or as a supporting factor in a longer-term trend system. Nonetheless, the data is widely watched and provides information not found in other sources.”
I follow the Forex Calendar @ Forex Factory I took a quick look at myxbook, it looks also ok. I guess the design is on yours is a bit better, but the many colors and pictures might make the overlook a bit more complicated. The bigger difference is that on myxbook there are more countries listed. I do not know if you can sort that or not. It can be an advantage if you would like to know everything, and a disadvantage if you cannot filter it and see all kinds of news from India, Mexico, the Netherlands etc. However at our level I do not think that calendar is the most important
I have to say this is my worst week since a long time. The week started ok, but now it does not matter what I do it turns out bad. I look live yesterday the BOC press conference, for me it was clearly bearish, traded it and did not work out. Earlier on I traded the news and it ended up the same. Hmmm sentiment is tricky with me this week… Guess I need some rest.
You can adjust the setting or else it would bemind boggling to look all these data. My brain sure won’t be able to process all that.
I’ve taken three trades in total 2 were winners and one was a loser. The loser was a bad trade and it was an error from my side it was more of like an impulse trade should have followed my trade plans.
Trading the news is very tricky. So I avoid trading during any high importance news events. Hence I only took 3 trades this week. I’m working on an improvised COT version where I will base my part of analysis on COT index and COT net positions /the idea isn’t new but I went through the thread which I’ve posted the link earlier and picked up a lot of things/. And hopefully we’ll find a way around to make this piece of information useful in our trades by integrating your and Mike’s part.
Hey guys… the latest flow I got going into US session for thurs. (actually just into london)
USD, AUD, GBP, JPY all tied for strongest.
CAD
EUR, CHF, NZD all tied for weakest.
NOTES: Most movement is NZD, and still getting weak.
AUD getting stronger
JPY same to stronger
USD not getting any weaker
GBP weakened some
CAD definitely getting stronger
EUR CHF getting weaker still
Hope this helps some. Also hope FE still wants to see this.
Sorry FE about the trading this week for you. I’ve had a very good week, and been not trading any more, prob until next week. Just on the sidelines watching and putting it all into perspective.
can you share maybe briefly some of your findings in that thread? Would be good to know!
Which trade did you take this week?
Tomorrow I write my review and the weekend seems to be quite packed but I try to write until Sunday night the percentile factors, if you do your search as well we can compair them! Write your top trade ideas as well!
Mike, can your write until Sunday night also your trade ideas down?
How do you use this info in your trades? I watched the video but would be good to know in which time intervall and how you use this data. I find it very informative but my broker does not give such statistics. Does it really help you in your trades or did you just think that it can be valuable in this thread?
That is a good idea to compile all of our data, info, and sentiments on the weekends. And then have a game plan for the week. I think we should also note what possible catalysts (economic indicator events) are on the near term horizon.
Then, we can watch what happens as it unfolds, and carry through with the opportunities that we will have set up already.
See, this week, I’ll tell you where I made most of my money. Sun night (market open) I was prepared to go short CAD, due to the flow since fri, NZD short also (flow), and AUD long (again the flow). I pulled the trigger and was pretty successful. Got out at the beginning of the london session. (good thing, because CAD made a serious come back very shortly after)
Then GBP I got the bull runs out of. But…hindsight is everything! If only I would have shorted NZD the entire week!! But how would we have known??? It must be catching the flow (of a currency) as it goes along, huh?
To sum it up he sets up his trades /the thread starter/ based on COT net position and COT index. The net position can be used to trade on the right side of the trend /or the large specs/ while COT index extremes can be used to trade reversal /remember how I’ve been wondering if there was a way to ride the big moves large specs are on? ;)/.
COT index reading runs from 0 to 100 percent. Reading close to 0 means short extreme , 100 means long extreme. COT index is basically calculated by -> 100x(current net position - minimum net position)/(maximum net position - minimum net position). And apparently COT index is used widely and with different settings 13-26-52 weeks respectively. In my part when I calculate COT index i’ll go as far as 26 weeks.
Again this only provides the general direction that we want to be on, to go long or short not the exact timing. We can refer to technical analysis for entry and exits respectively.
