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COT Weekly Trading Strategy

  • #41
  • Edited Apr 29, 2007 1:13am Apr 28, 2007 6:34pm | Edited Apr 29, 2007 1:13am
Quoting billbss
John,

Check my analysis.
Correct me if I'm wrong.

This weeks COT shows 12,000 new long open positions for the Non Commercials.

Therefore the prediction for the week is short GBP/USD.

4H chart shows the profit target and stop loss.

1H chart shows a present uptrend.
The CCI 50 needs to fall below zero and the MACD needs to turn down before the short position can be entered.

At that time the distance from the close of the 1HR bar and the TP must be near twice (at least) the distance from the close to the SL before the trade can be entered.
The direction is correct and analysis is fine, but beware couple things.
1. hour cci50 had been held by 0 line. MACD still in uptrend
2. 4h cci50 is below 0, I will expecting 78.6 reject as cci50 reject by 0 for entry trigger.
3. day chart: set stop at 127.2 in case you want to entry earlier without divergent form at h or 4h for entry signal.
target price now expecting at fib cluster at 19757
4. I will begin to keep eye on 9pm PST and 12am PST strategy improvment. If you have any new thought, please let me know.
Also, one thing to mention. for long, i want to see macd in up trend mode and CCI 50 is above 0 or 100
for short, the macd must be down trend, and CCI50 must below 0 or -100.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: cot0424gbp.jpg Size: 33 KB
Click to Enlarge Name: 0427gbp-d.jpg Size: 52 KB
Click to Enlarge Name: 0427gbp-4h.jpg Size: 52 KB
Click to Enlarge Name: 0427gbp-h.jpg Size: 49 KB
  • #42
  • Edited Apr 29, 2007 1:14am Apr 28, 2007 7:00pm | Edited Apr 29, 2007 1:14am
Quoting hoss
There should be trades with the CHF and EUR also with them both being > 10,000. Also with the CCI pointing up on the GBP, does that mean that trade is negated?
According to the strategy qualification, EUR/CHF will be short, and EUR/GBP will be short too

But, please keep eye at MACD, CCI 50 and CCI 14 in hourly, 4h and day for the direction confirm.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: cot0424chf.jpg Size: 33 KB
Click to Enlarge Name: cot0424eur.jpg Size: 33 KB
  • #43
  • Apr 29, 2007 6:58am Apr 29, 2007 6:58am
Quoting johntsai
According to the strategy qualification, EUR/CHF will be short, and EUR/GBP will be short too

But, please keep eye at MACD, CCI 50 and CCI 14 in hourly, 4h and day for the direction confirm.
John, How do you determine shorts for EUR/CHF and EUR/GBP?

The COT indicates weakness against the Dollar for all three currencies involved- EUR, CHF, GBP.

When comparing these three against each other, how can you make a determination?
  • #44
  • Apr 29, 2007 8:09am Apr 29, 2007 8:09am
Hello, Jontsai,

I have a question regarding your ebook. I dont get this line right: 2. We will draw the Fibonacci Ratio from the LATEST swing high to swing low, then from the swing low to MOST RECENCT swing high. By doing this, we will have two sets of Fibonacci Ratio place at the price in 4 hour chart.

You mean we take the latest swing high and draw a fib to the right side, to the latest swing low (blue Fib) and another fib to the left side (red fib)? Is it correct?

In this case, because we are looking to short, the red fib shows us where to put our stop (i.e. red 78% at around 2000) and go for a TP shown by the blue fib, at 127 level, 19935?

Can u please explain? Thanx a lot...
Attached Image
We leave no soldier behind.
  • #45
  • Apr 29, 2007 12:57pm Apr 29, 2007 12:57pm
Quoting billbss
John, How do you determine shorts for EUR/CHF and EUR/GBP?

The COT indicates weakness against the Dollar for all three currencies involved- EUR, CHF, GBP.

When comparing these three against each other, how can you make a determination?
hi billbss,

I apologize for the misleading. I was typing in rush, and didnt have time to check with chart right the way.

From my strategy, I only deal with major pair: EUR/USD, GBP/USD, AUD/USD, USD/JPY, USD/CHF, AND USD/CAD.

I just took some time and check them today.
EUR/CHF might expecting short term retrace. shown as attached.
EUR/GBP might expecting uptrend for long run due to 4h chart have cci trigger formed.(cci50 bounce from +100 line)

thx
Attached Image (click to enlarge)
Click to Enlarge Name: 0427eurchf.jpg Size: 51 KB
  • #46
  • Apr 29, 2007 1:12pm Apr 29, 2007 1:12pm
Quoting gagiul
Hello, Jontsai,

I have a question regarding your ebook. I dont get this line right: 2. We will draw the Fibonacci Ratio from the LATEST swing high to swing low, then from the swing low to MOST RECENCT swing high. By doing this, we will have two sets of Fibonacci Ratio place at the price in 4 hour chart.

You mean we take the latest swing high and draw a fib to the right side, to the latest swing low (blue Fib) and another fib to the left side (red fib)? Is it correct?

In this case, because we are looking to short, the red fib shows us where to put our stop (i.e. red 78% at around 2000) and go for a TP shown by the blue fib, at 127 level, 19935?

Can u please explain? Thanx a lot...
its always good to have question
according to the method of drawing the fib line in my ebook, the pic you did is a great work. but be notice, please focus on basic three level of fib i mentioned in ebook.

from update i did few days ago, please keep eye on the macd, and cci.
in this point due to possible fail technical support.

in the GBP/USD pari, i realize cci50 bounce from 0 line at hourly chart(uptrend), but cci bounce from 0 line at 4h chart(downtrend). shown as pic.

therefore, if you want to open the position at sun, it should be long and target price for 78.6(the retest resistance) before going downtrend(as cot report expect).

also, always try to find previous fib level for more confirmation of trend direction. (as the secong fib from the very left in the pic,161.8 become support for uptrend possibility)
Attached Image (click to enlarge)
Click to Enlarge Name: 0427gbpusd.jpg Size: 52 KB
  • #47
  • Apr 29, 2007 2:58pm Apr 29, 2007 2:58pm
Quoting johntsai
its always good to have question
according to the method of drawing the fib line in my ebook, the pic you did is a great work. but be notice, please focus on basic three level of fib i mentioned in ebook.

from update i did few days ago, please keep eye on the macd, and cci.
in this point due to possible fail technical support.

in the GBP/USD pari, i realize cci50 bounce from 0 line at hourly chart(uptrend), but cci bounce from 0 line at 4h chart(downtrend). shown as pic.

therefore, if you want to open the position at sun, it should be long and target price for 78.6(the retest resistance) before going downtrend(as cot report expect).

also, always try to find previous fib level for more confirmation of trend direction. (as the secong fib from the very left in the pic,161.8 become support for uptrend possibility)
thanx a lot for explanation, I still have to figure out how the Fibs work and try them out. So we first go long and at 78.6 level we cover longs and wait for CCI 50 and MACD to point down, and we go short, with stop at 78.6 level (previous TP). Did I get it right?
We leave no soldier behind.
  • #48
  • Apr 29, 2007 3:16pm Apr 29, 2007 3:16pm
Quoting gagiul
thanx a lot for explanation, I still have to figure out how the Fibs work and try them out. So we first go long and at 78.6 level we cover longs and wait for CCI 50 and MACD to point down, and we go short, with stop at 78.6 level (previous TP). Did I get it right?
for this point, i am expecting this way, but dont count on it.
your conept of stop loss is right, but always consider your risk and profit ratio when you setup the target price.
  • #49
  • Edited 4:23pm Apr 29, 2007 3:40pm | Edited 4:23pm
I agree on that. Going long has a 1:1 profit ratio, but it might be succesful. As you said, looks like 161 line at 9955 is providing some support, so it might retest the high at 20030 again. I suppose I will go short once the price comes back below 20015 (78 fib) and CCI and MACD start pointing down.

Very interesting and cant wait to see how it will develop. Of course I will try it on demo, just want to get used to this different approach to trading.

Update: looks like we had a gap down, so now its even trickier. As far as I know, market should cover the gap, so it will go up, then down. Actually it did as I write this, so I will go long around 1.9980, as you suggested.
We leave no soldier behind.
  • #50
  • Apr 29, 2007 7:05pm Apr 29, 2007 7:05pm

I got stopped out on the Long trade. CCI and MACD are pointing down so time to go short.

We leave no soldier behind.
  • #51
  • Apr 29, 2007 7:25pm Apr 29, 2007 7:25pm

I got stopped out on the Long trade. CCI and MACD are pointing down so time to go short.

We leave no soldier behind.
  • #52
  • Apr 30, 2007 11:45am Apr 30, 2007 11:45am
Chalk up a loss for the system this week on GBP/USD.
  • #53
  • Apr 30, 2007 12:59pm Apr 30, 2007 12:59pm
Quoting billbss
Chalk up a loss for the system this week on GBP/USD.
Well I didnt lose on the short actually, even if it didnt reach the target, but I got out early enough. Anyways, interesting system indeed. It just needs a little more twicking.
We leave no soldier behind.
  • #54
  • May 1, 2007 12:25am May 1, 2007 12:25am
Quoting gagiul
Well I didnt lose on the short actually, even if it didnt reach the target, but I got out early enough. Anyways, interesting system indeed. It just needs a little more twicking.
any good idea about improvment??
  • #55
  • May 1, 2007 5:24am May 1, 2007 5:24am

I scratching my head since yesterday. Im just a newbie, but I really want to improve this simple and effective strategy. Anyways, losses always occur, next week will be different, im sure.

We leave no soldier behind.
  • #56
  • May 1, 2007 10:28am May 1, 2007 10:28am
Quoting gagiul

I scratching my head since yesterday. Im just a newbie, but I really want to improve this simple and effective strategy. Anyways, losses always occur, next week will be different, im sure.


I believe time of entry should be essential to this nice strategy. Last week COT report showed that there was a substantial increase (over 10K) of net new short positions in euro, swissie, cable. Traders positioned themselves for the upcoming good news for dollar this morning. It looks like the best play against COT stats was shorting swissie, dollar is also underpinned in this pair by favourable interest differential for greenback.

Tamkras
  • #57
  • May 1, 2007 2:38pm May 1, 2007 2:38pm
Interesting strategy.could be please clarify the logic behind positioning against the non commercial "big traders". Am I naive in thinking that if the big money is on say long GBP/USD with increasing open interest on COT data then the chances are that the price action for that pair would favour long than short??
  • #58
  • May 1, 2007 3:01pm May 1, 2007 3:01pm
Quoting kanis uk
Interesting strategy.could be please clarify the logic behind positioning against the non commercial "big traders". Am I naive in thinking that if the big money is on say long GBP/USD with increasing open interest on COT data then the chances are that the price action for that pair would favour long than short??
in my understanding of this logic is that non-commercial have to against the direction of the market no matter what, and they got to be right about it in order to make market balance.

for deeper concept, can anyone help at this?
  • #59
  • May 1, 2007 3:12pm May 1, 2007 3:12pm
Quoting johntsai
in my understanding of this logic is that non-commercial have to against the direction of the market no matter what, and they got to be right about it in order to make market balance.

for deeper concept, can anyone help at this?
Non-Commercial = Large Speculators

Quote
The large speculator category, on the other hand, usually has only one type of trader – someone who can trade size (i.e., holds at least 500 bond contracts) and does not deal in the cash market. This is typically a large floor trader, managed futures accounts or a small hedge fund. In general these types of traders are technically oriented trend-followers. Since the large speculator category is more consistent and trend-followers usually over-do-it at extremes, we are most interested in how these traders are positioned. We want to "fade" the large speculators.

Source:

http://www.arborresearch.com/biancor...structions.htm
  • #60
  • May 2, 2007 6:34am May 2, 2007 6:34am
That info is useful, in other words COT reports should help in giving us early signs of possible trend reversal ??
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