What Every New & Or Aspiring Forex Trader... Still Wants To Know

Beginner Questions
3135

I have some questions regarding Top Down analysis.

When i look at the current COT report. The figures i see under commercial are;

Long 86,027
Short 81,060

To derive the net position we 86,027- 81,060 = 4,967

This means that there are more longs than shorts, so the the bias accordingly to the COT is that i should be looking for long oppurtunities ? Have i understood this correctly?

Regarding the Treasury notes charts in the videos, i’m currently aware of timingcharts.com where i can find th charts, but it’s tiresome always switching between one and another and comparing. Isn’t there an easier way of doing this?

3136

Pray that the news release favors your trade :stuck_out_tongue:
At least that’s how I do it. I don’t pay much attention to news to be honest unless it’s something major, I’ll look for setups before the news and the following volatility. But if there’s no setups before news, I won’t trade afterwards.

One of the fundamental theories/principles in technical analysis is that everything is shown on the charts, so if news were to be released, I just remember this principle. Meaning, there should show a bias on the charts before the news was even released.

Hope that helps.

Regards,
Clark

3137

Yeah, it means there is 4 967 more long positions than short. At the same time, you need to look at the previous numbers to get an understanding of the bias. Did the longs increase or decrease from before? Is this a new high/low in COTs in the last 1-2 years, etc. That will help you gauge a bit more.

3138

The longs increased by 878 and the shorts have decreased by -10,188 from the previous week, is it enough to just look one week back and note the changes that have been made?

Also i’m now looking at Euro-Globex weekly. over a 2 year period.

Imageshack - cot.png

I can see that the green line seems to be heading south ( large speculators) and the blue line(hedgers) seems to be heading north . Does this mean that the large speculators are becoming more bearish and that the EURO is given a bias to fall?

But i’m still confused, if the euro were to fall how come there are more longs than shorts? :33:

3139

I would think that its because the price has some room to move up before going short.

3140

Could you explain furhter?

Or if anyone would like to share their interpretation i would be most grateful!

3141

Given your diagram, you can see that the Commercials have been steadily increasing their long positions from an extreme low at roughly -120 000. What this can indicate is the the Fiber may start rising and its short selling is starting to lose steam as the Commercials are the “Smart Money” and they are increasing on their long positions. Also, you’re looking at Euro - Futures Contract. Look under Forex -> EUR/USD and you’ll get the Fiber COT graph. :slight_smile:

Also, the increased net longs could indicate that the Fiber may have made an intermediate low. The tide may be turning around for the shorts… :wink:

Regards,
Clark

3142

You have to look at the EXTREMES in positioning for COMMERCIAL traders. Who is calling the highs and lows? It’s the commercial traders, every time. At critical highs, the commercials are positioned Short. At critical lows, the commercials are positioned Long. Do you see that on your chart?

But the thing is, before the absolute ceiling/floor is found in price, the commercials are actually WRONG. The large specs are trading with momentum, and they are actually positioned better until the these extreme lows/highs are reached. Then the commercials, who have been accumulating counter-trend positions all along the way, finally get their pay-day…and what a pay-day it is!

So recently we seen the commercials accumulating a massive short position. This would put my COT bias as SHORT, until the commercials are willing to accumulate an extreme Long position, and start the ball rolling the other way!

That’s what I got out of an ICT webinar, that may or may not have been recorded. And if it’s not exactly what ICT said, that’s because I might have filled in some of the gaps using my own logic. Hope this helps!

3143

akeamakai, when you write that they recently accumulated a massive short position and when clarkFX writes that the commercials are increasing in long positions this really confuses me. In my eyes it looks like the commercials ( blue line) is starting to take long positions because it’s heading north?

Imageshack - cot2n.png

I corrected my error and it should be showing the fiber and not the euro futures.

3144

I only look at the [B]Extreme[/B]s in commericial positioning. There is no extreme currently (in fact we are pretty much near zero), so I look back to the most [I]recent[/I] extreme, which was a rather large short position.

essentially, I don’t watch the week to week trends of commercials positioning. I just see it as a giant rubber band, and only when it looks ready to snap do I get interested.

3145

Ahhh, i see that’s what you meant by massive short positions, you were reffering to the recent extreme by the commercials?
Things made much more sense now.

So let me get this straight, IF the commercials are heading north to reach a new extreme, my COT bias is long ? And if they are heading south my COT bias is short?

3146

I’d rather word it like this. The commercials built up those positions for a reason: they expected lower prices. So that was the bias that they were signalling through COT, and I don’t see a reason to change my COT bias [I]until[/I] there is an extreme long position built up. ICT mentioned looking at the yearly extremes in COT commercial positioning, and also the 4y extremes in positioning.

But this tools is a really wide perspective on the market. This kind of bias wouldn’t stop me from Buying the fiber on intraday trades at all. It’s just nice to have that “geography” mapped out, and know kind of where you are sitting in the big picture. Also, if current conditions ARE extreme, you don’t want to be trading against those “commercial flows” who basically have total control over the market because they were on the right side of the market at the extreme high/low.

It’s really quite powerful and amazing if you can see some of those flows in action and know that’s driving them :wink:

3147

[I]But the thing is, before the absolute ceiling/floor is found in price, the commercials are actually WRONG. The large specs are trading with momentum, and they are actually positioned better until the these extreme lows/highs are reached. Then the commercials, who have been accumulating counter-trend positions all along the way, finally get their pay-day…and what a pay-day it is!
[/I]

But it seems very irrational to position yourself counter-trend, especially traders as us ,don’t the commercials loose money doing that until an extreme is created and when the extreme is created it yields more money and a profit that covers all their losses?

So summary is that the COT bias is determined by the recent extreme that was created, in this case a extreme low and thus our COT bias is short. Until an extreme long is created then we change our bias to long?

3148

[B][I][B]How do you feel about your current level of Forex understanding?
[/I][/B]
Forex trading is about developing patience, learning strict discipline, money management and risk management techniques over a sustained period of time in LIVE current market conditions. I must be focused and remain emotionally detached from the market. Easily stated and much harder to accomplish on a consistent basis

If I stay the course, i will succeed. Each person will cross the finish line at their own pace. It isn’t a race. It becomes a way of life at the pace your schedule and passion permits for learning. i will build the foundation week after week as my experience grows with time.

[B][I]Have you found any of your poor habits removed or controlled now?[/I][/B]

I know before initiating any trade, if you haven’t already figured out at what point you would be wrong and would want to cut your losses or, at the very least, reevaluate your position from the sidelines, then you shouldn’t be in the trade in the first place.

[B][I]What constructive habits have you adopted since joining us here? [/I][/B]

  1. Assess the Market
  2. Identify the opportunities
  3. Move into the Trade
  4. Monitor the Position
  5. Move out of the Trade or take new position
  6. Evaluate the Trade
  7. Tweak your Trading Plan. Simplify, simplify and simplify.

[B][I]Has greed and or fear been a barrier or stumbling block for you… Or even better, have these been overcome by reducing your trade leverage?[/I][/B]

No. Our job as astute market speculators is to turn on the computer and search for low risk, high reward, and high probability opportunity. If and when we find it, we take action. If there is no low risk, high reward, and high probability opportunity at hand, we must have the patience to wait for it.

.
[B][I]We have a considerable base group here and I would like to see what your “thinking” is at this stage.[/I][/B]

A person with money meets the person with experience.
The person with the experience leaves with the money and
The person with the money leaves with the experience

[B][I]How has your psyche has been changed by the concepts shared here thus far…This is of great interest to me as a mentor.
[/I][/B]
I’ve come to understand one major component in trading profitably is cultivating the proper mindset. And to do so, you must be rested, focused, and ready to put in extra-human energy to capitalize on those moments when ideal trading opportunities materialize.

So figure out how much sleep, leisure time, relaxation, and exercise you need to maintain a high level of energy, allocate that time carefully, and maximize your energy level for when you need it for positive pip trading.

[B][I]Please indulge me and share what steps you have taken and what progress have you seen in your personal development?
[/I][/B]
I guess the biggest so far has been the way I approach sleep. On west coast time, I can monitor the LO and the LC and still get the right amount of sleep necessary to perform everything else I do (I work at night). The consistent profit hasn’t come just yet because I’ve just started trading this new way, but it will, and then the real personal development starts to take shape! VICIOUSp

Well personally I dropped everything else I had going on in my trading bubble and I focus exclusively on this thread and these techniques. I saw a titanic shift in my understanding, not just the concepts but also market structure, how the markets move, when and why. I think the two biggest things I have taken from this extraordinary experience so far are first, the firm belief that it is actually possible and second, I have submitted to time and no longer feel panicked in my study.
THE HUNTER

I totally agree with the above….

P.S.

Attributes of a Leader

"Real leaders come in all shapes and sizes and from all walks of life, but they all have a few things in common: They are never so big that they can’t bend down to help someone else.

They are never so wise that they don’t remember who taught them.
They are never so gifted that they won’t share their skills with others.
They are never so fearless that they don’t play by the rules and live by the law.
And they are never such big winners that they forget what it feels like to lose."

  • Jimmy Stewart, actor

Thank you ICT for being this kind of leader to us.

1 Like
3149

Just remember why the commercials are in the market: to hedge risk.

Specs [I]bear[/I] the risks and thus have to worry about losses, that’s why they ride on the flows of the commercial traders. There’s a grey area, like what we are in currently, where it’s too hard to tell (with my experience anyway) whether the commercial traders are [B]Accumulating[/B] new positions, or [B]Distributing[/B] current positions.

This isn’t always black and white stuff, and let me repeat that I’m really not trading off this information unless there are extreme conditions in place. This is background information largely, and I’d be focusing on 4H/Daily flows for your real clear trading biases.

I’d recommend asking ICT to explain this in a webinar sometime if you have the chance. He can bring up the COT graphs and explain it to you much better than I can lol

3150

Of course, it’s just a large scope to give a hint where the market is heading :slight_smile:

Thank you for the time you took answering me, really appreciate it ,i’ve re-read it many times trying to understand. But did i interpret everything you said correct with what i said in the summary in my previous post?

Webinar, what does it mean? Like a talking live in the chatroom?

3151

ICT shares his screen, we see his monitor and he narrates stuff at the same time :slight_smile:

3152

yes, exactly!

Yes I would agree with your summary, but would add this: monitor the extremes made in the last 4 years as well as just the most recent 12months. There was a very large commercial long position in May, 2010 that could still be driving the bullish flows. Do you see how it can be hard to nail down a specific bias on any given week? The clarity emerges when the extreme positioning is in place, and you know either the commercial or spec group is going to get smashed. It’s just safe to bet on the commercials winning these battles, and that’s really the essence of the COT edge.

yeah, ICT can do voice chat and bring up screen sharing to show you charts. I think one could be happening this sunday, stay tuned I guess :41:

and BTW I like that site, timingcharts.com, very good charts for free :slight_smile:

3153

I see. Does the information occur in the thread when a webinar is about to beginn ?

3154

Sunday 7pm EST New York time

Webinar will be approximately 30 mins. Q&A session afterword.