I can find the latest COT report, however I am wondering where I get the information in a chart format? either to download or to use with MT4.
Also how to correctly interpret the net position data, for example if the line is above a certain point does this mean net long of short? conversely if it is below a certain point is this net long or short?
And then would a short position indicate that the hedgers believe the price will rise? seeing as this is the futures market or is the short position as it usually is, indicating a fall?
I am not quite familiar with COT Report however one of our member here in BP (Dstan)open up a thread called “Follow the Smart Money/COT Analysis”. Here is the link 301 Moved Permanently.
I am following along with this thread. You might want to ask Dstan directly regarding your specific question and maybe he can help.
Learning how to interpret the COT report is in itself a complete learning course.
The vanguard of using this report was led by a certain Mr Larry Williams - if you wish to learn directly from him then it will cost you dollars - a simple solution.
A google search of ‘the cot report’ will get you there.
If, like me, you believe that the art of trading can be learned by hard, and often boring work then this Babypips.com site will offer you all the information and tools you need to start learning.
There is a professional trader on here who has learned a great deal from Mr Williams and who is very willing to pass on his 20 odd years of experience in using this very powerful tool - for free, you’ll find a specific video on this subject by him on youtube.
A simple search of ‘youtube cot report’ will probably get you there.
Now hopefully I have’nt spammed any particular thread
COT is useful for position traders but if you are a short term or day trader it’s really useless in my opinion! If you are a position trader you should follow the net positions for the non-commercials and not the Commercials. The Commercials are buying or selling for different reasons than you are, usually to hedge their funds that is why whenever you see the commercials going long you will see the currency going down, never follow the commercials.
These are by far the best videos that explains how the cot works watch them all, 4 of them, and you will have a better understanding of it: COT Videos
Agree with your first point, disagree with your second point. You have to follow the Commercials, the Smart money … that’s exactly what I do and it works very well for my long term trades. But the COT report on its own will only give you a steer on sentiment, you can’t base a whole strategy on it.
Perhaps you and me have a different definition of smart money, I just don’t see how you can follow the commercials, watch the videos that I posted, that is where I base my opinion from. The commercials from what I understand are large corporations like the Auto Industry and many other industries, the Non-Commercials are the large Speculators like banks and fund managers etc, as I look at this chart the red line represents the commercials if I were to follow them I would experience huge losses but if I was to follow the Non-Commercials (large scpeculators) I would of done pretty darn good wouldn’t I? Perhaps you can post a chart of a real trade of yours and how you are following these Commercials? I just don’t see how!
Here is one chart (it’s my own Excel chart) but you may want to check out this video from ICTs thread:
You also may want to read Larry Williams book on the COT
You’ll find the commercials ARE the smart money and following them doesn’t guarantee price going the same way, but it gives you an indication. I use the COT data as ONE of my indications to take a long term trade (I have a bundle of 6 alerts and I take a trade if 4 out of 6 pass).
Thanks - this is what i thought, it’s best to follow the commercials, as they tend to know what they are doing =)
One thing I do not quite understand about the COT, is that these positions are held on futures aren’t they? so the position the commercials hold is based on future sentiment? as in where they think price will be going?
Not quite but I can see why you are getting confused. If I think the gbp is going to weaken in let’s say 3 months and I have a lot of gbp in the bank, what would I do now? I would sell my gbp or start to off load them. This is just an analogy but the point being that my sentiment for the future is seen by my action today. The extremes and the outliers as I like to call them are the ones that are of interest to me. I’m sure other people use the COT data differently to work for them. But remember, I can’t stress this enough, don’t use the COT data on its own to predict what the market will do. You’ll get stung… Hard.
I don’t know what represents what on that chart! Which 6 other alerts do you follow? I don’t think that following the commercials as soon as they start buying or selling will make you any money because market tends to go in the opposite direction when this happens but eventually in the future it will turn turn and yes it can be used that way but I would never start selling or buying when I see the commercials doing so unless I have a death wish. I would like to know a little more about your trading plan in detail if you can of course.
On June 8 this year Spain had it’s rating cut by 3 notches to Baa3 - one notch away from junk status, Cyprus had it’s rate cut two notches - now well into junk territory.
The accompanying report said that further downgrades were possible. Downgrades of France and Germany were also likely should the Eurozone break up.
In July Suisse Bank report urged’ Firms to prepare for Eurozone break up’.
Eurozone periphial countries, including my own, were openly acknowledging that they were making preparations.
If you open a chart on Fibre daily - let it show you 12 months and have it stop on July 24 2012 - do’nt show anything else on the right - you now have the picture both from the fundamentals and the technicals - the Euro has to fall further.
This video - made on July 22 - at 16.00 mins listen closely - this is cot interepation and how to read it.
Red line= 12 month extreme of COMMERCIAL net positions
Orange line = open interest
Line chart = net COMMERICAL positions
I’ll pass on your last sentence but I will give you some words of wisdom, take or leave it, makes no difference to me: DO NOT believe everything you read or watch on forex. If you have watched some videos telling you non commercials are the key, pull the data yourself and prove it. ALWAYS ALWAYS test and practice with the data, do not believe everything you read. i would say 80% of content that is around the net is complete rubbish and misleading, try to filter and use the trusted genuine stuff. Good luck.
I though I’ll put in my thoughts here regarding the “who are the smart money?” question.
I think it is important to put down some important remarks first. Since the cot report is not a derivative of price, we should be careful in interpreting its information as if it was a usual TA, such as RSI for example. If we understand this then we also have to see that although there are general tools in cot analysis that can be used on each market, since it is showing the positions of traders trading that specific market, we need to see that every market has its own characteristic --> a change of 20% (based on a 1 year range) in positions held by traders on Oats market has a different meaning then a 20% change in CAD. OR another example --> interpreting signals of small speculators: Small Speculators are correlating with Large Speculators on most of the markets, but in Live Stock markets (for example Live Cattle) they tend to correlate with Commercials.
To answer the question above, in general I think it is best to follow Large Speculators (non-commercials) in a trend. Of course we have to keep our eyes open at COT extremes and see that Commercials are the ones who are on the right side of the market at trend reversals (tops / bottoms). Of course as I’ve said above, we need to analyze markets separately and do a historical analysis to understand the specific signal we wish to understand.
I have a thread here on babypips ([B]Follow the Smart Money / COT Analysis[/B]) that deals with cot analysis, where I try to show you the tools I use to analyze cot data. You might want to check it out if you would like to know more about this topic.
Basically you asked Dstan on his thread for some trade examples and after he said that his thread wasn’t about showing trading examples but to educate trader on the subject of COT you quit the tread yet you are doing the same here! Don’t you think?
I didnt quit this thread, I’m still here. My point is if I did start a thread and start pulling 40 lines plus of commentary every week on the COT like Dstan does, then it would have more credibility to show examples of live trades. How can someone educate people without firstly showing that they can apply what they preach. Don’t you agree with me?
I didn’t mean you quit this thread but the one started by dstan! Yes I do agree that is why I asked for some trade examples from you on this thread. I have a small account in a Bank in Europe ( in the country that I was born but I live in the US) luckily it allows me to choose my currency and that is the only time I use cot, I don’t leverage with it because it’s positional and in the past I changed this account from euros to dollars and vice versa, it’s not a big thing but it worked out, of course the account is not big enough to make any true impact in my financial scene but ended up making a few bucks. But you look like this is your main way of investing and that is why I asked!
I read a lot of article. All the article asking us to follow Non- comm even Kathy Lien also asking us to follow non-comm
But in Larry Williams’s book do ask us to follow Comm (Smart Money) thats make me confusing.
Mrchilled, you are pretty good in excel.haha
