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Another way to trade PA profitably

  • #41
  • Aug 24, 2007 11:25pm Aug 24, 2007 11:25pm
This should be the thread title:

Quoting CateFul
... The nice thing about the COT is, you know the market is going to go up, so it does not really matter where you got in, if your timing is wrong, don't worry, the market will come to your rescue.

Also if you trade with the trend and the support from the COT, you could literally turn $200 to $2000 in one trade, by adding positions every week with the profit you've earned from last week, as long as the market is moving your way you have nothing to worry about. With a 50:1 leverage you could've doubled your account during the first week of the AUDJPY trade I posted in previous posts.

Also with these longer term trades you do not worry about news. If you're getting hundres even thousands of pips out of one trade, you shouldn't be worried with a 50-pip news drawdown.
Looks like I should cross correlate some charts
  • #42
  • Aug 25, 2007 3:37am Aug 25, 2007 3:37am
Quoting CateFul
Thanks for the chart mason. However on chart I have a bullish candle on all JPY pairs. I'm not sure if the candle aggregator "aggregates" correctly. But why not just use a weekly chart?
I use not only weekly, but many custom TF for daily. I have seen many times PB from small TF went up to higher TF that later shows PB too. In this case daily to weekly.

How wrong it is, we can only know by monitoring them, just as COT told us.


Do you mind, highlighting what kind of information are useful for you, such as found here http://www.shatterfield.com/cot.whatis.php ?
  • #43
  • Edited 9:48am Aug 25, 2007 4:34am | Edited 9:48am
Quoting CateFul
does anyone know how to change the thread title? You guys seem to be more into this COT stuff than PA so I'm thinking to add COT into the title.
Scroll right down and you'll see a Contact link bottom left of the page. Tell the mods what it is you want to change and hey presto...
  • #44
  • Aug 25, 2007 9:30am Aug 25, 2007 9:30am
Quoting mason
I use not only weekly, but many custom TF for daily. I have seen many times PB from small TF went up to higher TF that later shows PB too. In this case daily to weekly.

How wrong it is, we can only know by monitoring them, just as COT told us.


Do you mind, highlighting what kind of information are useful for you, such as found here http://www.shatterfield.com/cot.whatis.php ?
Net positions of commercials and their percent of open interest. Use the long form posted on CFTC. That will include small speculators. I use their net positions and percent of open interest, too. And I also use COT index which can be calculated by hand. It shows the relative position as to the past 26 weeks.
Take a report.
  • #45
  • Aug 25, 2007 10:45am Aug 25, 2007 10:45am
Quoting CateFul
If you're still confused, think of it this way. US based ABC Bank operates in Japan and it's giving a loan of 10 billion japanese yen, or 100 million dollars to a japanese company. In order to do that, it needs to convert some of its dollars to Japanese Yen. So they do an analysis and it looks like the Japanese Yen is going to appreciate. So what they do? Right, they buy the yen now so they're paying a cheaper price. If they buy a week later, it would cost more than 100 million dollars. So in this sense they're profiting from a lower cost of providing the loan service, which translates to better ROI.
It's ok, Cateful. Here is my argument. Let's see. A Japanese customer walks into a Tokyo branch of US based ABC Bank and asks for a loan. The Japanese customer may walk in on Sept 1, or Jan 1, right? Japanese customer has just received a large order and they need the money now. So, the commercial bank does the analysis and finds out that the Japanese customer can not get the loan because yen is NOT going to appreciate. So, this bank decides to turn away the application.

Our disgruntled Japanese customer (with a large order, s/he may even have on hand a Letter of Credit issued by another Japanese bank) turns away, crosses the street and gets the loan from a Non-Commercial Bank. This bank does not know whether yen is going to appreciate or depreciate but in order to protect their risk of further yen appreciation they short yen futures with delivery within a loan term. Because now, they have the product on hand (big loan to a Japanese customer). If yen continues to appreciate, the futures will be a loss, or rather an insurance cost. The loan still works and produces money. If yen starts to depreciate, the futures will offset conversion loss in a foreign exchange transaction. If this bank is even smarter (and I am sure they will be) they will open a line of credit with several tranches to secure themselves from the risks of non-delivery and market conditions at that time.

Just my line of thinking.
I am a very humble trader Up 380 pips - two trades.
  • #46
  • Aug 25, 2007 6:09pm Aug 25, 2007 6:09pm
Quoting Urchin
It's ok, Cateful. Here is my argument. Let's see. A Japanese customer walks into a Tokyo branch of US based ABC Bank and asks for a loan. The Japanese customer may walk in on Sept 1, or Jan 1, right? Japanese customer has just received a large order and they need the money now. So, the commercial bank does the analysis and finds out that the Japanese customer can not get the loan because yen is NOT going to appreciate. So, this bank decides to turn away the application.

Our disgruntled Japanese customer (with a large order, s/he may even have on hand a Letter of Credit issued by another Japanese bank) turns away, crosses the street and gets the loan from a Non-Commercial Bank. This bank does not know whether yen is going to appreciate or depreciate but in order to protect their risk of further yen appreciation they short yen futures with delivery within a loan term. Because now, they have the product on hand (big loan to a Japanese customer). If yen continues to appreciate, the futures will be a loss, or rather an insurance cost. The loan still works and produces money. If yen starts to depreciate, the futures will offset conversion loss in a foreign exchange transaction. If this bank is even smarter (and I am sure they will be) they will open a line of credit with several tranches to secure themselves from the risks of non-delivery and market conditions at that time.

Just my line of thinking.

you're absolutely right. All I wanted to prove is this, commercials do not make money off speculation.
Take a report.
  • #47
  • Aug 26, 2007 6:24am Aug 26, 2007 6:24am
Having looked at all available weekly fx charts, I note that there has in fact been a trend reversal mostly whenever COT Index for commercials is near extremes, in spite of the fact that COT reports are published on Friday close with a delay of three days and in spite of the fact that fx futures constitute a fraction of the cash volume.

In your experience, if we save the weekly charts at the end of each week, are they valid and useable for the whole of following week for the purposes of using the dailies to get in a trade at a favourable price?

Also you mentioned that you set very large stops or no stops at all, are these set below or above the current swing? For instance for your long AJ was it below 86 or do you have other criteria?

Thanks a lot for starting this thread and sharing your experience in respect of this LT trading method
Regards
  • #48
  • Aug 26, 2007 2:15pm Aug 26, 2007 2:15pm
Quoting howard
Having looked at all available weekly fx charts, I note that there has in fact been a trend reversal mostly whenever COT Index for commercials is near extremes, in spite of the fact that COT reports are published on Friday close with a delay of three days and in spite of the fact that fx futures constitute a fraction of the cash volume.

In your experience, if we save the weekly charts at the end of each week, are they valid and useable for the whole of following week for the purposes of using the dailies to get in a trade at a favourable price?

Also you mentioned that you set very large stops or no stops at all, are these set below or above the current swing? For instance for your long AJ was it below 86 or do you have other criteria?

Thanks a lot for starting this thread and sharing your experience in respect of this LT trading method

Yes, it is valid throughout the week and if it stays there for another week the signal carries on with it.

If you get in at the right time, you get very little drawdown or no drawdown at all. on the AUD/JPY I got a 90+-pip drawdown before it took off. What I do is, set a stoploss I feel comfortable with, and use Jacob's anti-hedging method if the stop gets hit.
Take a report.
  • #49
  • Edited 5:46am Aug 27, 2007 4:29am | Edited 5:46am
Quoting CateFul
Yes, it is valid throughout the week and if it stays there for another week the signal carries on with it.

If you get in at the right time, you get very little drawdown or no drawdown at all. on the AUD/JPY I got a 90+-pip drawdown before it took off. What I do is, set a stoploss I feel comfortable with, and use Jacob's anti-hedging method if the stop gets hit.
That sounds good to avoid large drawdowns provided the market goes down enough and comes back to get you in
Regards
  • #50
  • Aug 27, 2007 10:51am Aug 27, 2007 10:51am
Quoting mason
Here are other views about weekly EURUSD.

if shorting then it will be small retracement, better find ways to long again.
I know euro likes to pass beyond the critical levels such as 1.3650 only to bounce back in the opposite direction (read: long) but let's be serious - what is a good entry for going long? Because I am short. Let's keep up this thread, folks, as we may discuss some interesting entries. I would hate to see it going dead after 2-3 pages.
I am a very humble trader Up 380 pips - two trades.
  • #51
  • Aug 27, 2007 2:09pm Aug 27, 2007 2:09pm
So if our bias is to go long for EURUSD, we need to find confirmation for that, below are my line of thinking from daily to H4, certainly this view should be monitored constantly, but we already have assumption in mind, if price breaks in this area then what would be our action, for example, if PB down in daily (H24) has been triggered, we may go short, probably with immediate fib ret line as TP.

But right now, we have trend continuation PB up in H4, and price already show little retracement (12 pips), wait a little longer or just hit the button, it's still another choice, hope this will provide another insight.
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  • #52
  • Edited 6:08pm Aug 27, 2007 4:31pm | Edited 6:08pm
Quoting mason
So if our bias is to go long for EURUSD, we need to find confirmation for that, below are my line of thinking from daily to H4, certainly this view should be monitored constantly, but we already have assumption in mind, if price breaks in this area then what would be our action, for example, if PB down in daily (H24) has been triggered, we may go short, probably with immediate fib ret line as TP.

But right now, we have trend continuation PB up in H4, and price already show little retracement (12 pips), wait a little longer or just hit the button, it's still another choice, hope this will provide another insight.
Much appreciated, Mason. I would wait for a deeper price retracement and more convincing actions of the longs. Therefore, I would keep my euro short and yen long (already protected some profit) as of yet.

EDIT: euro has the last chance to bounce off 1.3636 now. If the commercials fail, I will add more. I am up 70 pips so far with yen.
I am a very humble trader Up 380 pips - two trades.
  • #53
  • Aug 27, 2007 6:15pm Aug 27, 2007 6:15pm
looks like we now - @115.59 have usd/jpy pinbar in the making. Should be a valid long signal.
I am a very humble trader Up 380 pips - two trades.
  • #54
  • Aug 27, 2007 6:28pm Aug 27, 2007 6:28pm
Quoting Urchin
looks like we now - @115.59 have usd/jpy pinbar in the making. Should be a valid long signal.
Yeah, but remember daily bars are more valid than hourly bars.
Now it's hitting some retracement levels, 100-200 pips movement in this area isn't uncommon, I'll give it sometime to play itself out. Lock in some profits if your carrying over from last week, just in case.
Take a report.
  • #55
  • Aug 27, 2007 7:29pm Aug 27, 2007 7:29pm
Urchin can You tell what makes You to go short with Euro,commercial are on top Euro is in up trend?
Zuzia9
Grate You get some pips !!!!!
  • #56
  • Edited 8:19pm Aug 27, 2007 8:08pm | Edited 8:19pm
Quoting zuzia9
Urchin can You tell what makes You to go short with Euro,commercial are on top Euro is in up trend?
Zuzia9
Grate You get some pips !!!!!
Hey, zuzia, can't complain at all. up 40 pips short euro and 70 pips long yen as of this writing. Who knows maybe I will be taken out this night, so yes I will protect the profit one more time . Anyway, I had some thoughts in the beginning of Cateful's thread why the commercials' reading was dubious to me for this week but it was indeed strong last week. I simply do not try to blindly copy the commercials. But in case of doubt I go the opposite way. So, these are my live trades, no B.S. and no self-promotion at all. I would have preferred to open the trades today but the chance yesterday was also good to start fading the rallies. I would also prefer to keep the trades for 1 complete week until we get the next CFTC report. So, if my target is reached earlier so be it.

Cateful, I really appreciate you started this thread so as we can try out (forward test, i.e.) when the commercials are strong and when they are weak, and trade accordingly. BTw, did you try to change the name of your thread?

Eg. "How to read the Commercials with a consistent profit", or "Commercials vs Non-Commercials System"... Just kidding.

Euro has not used its last chance and I am not at all apologetic. Let's see what tomorrow brings us.
I am a very humble trader Up 380 pips - two trades.
  • #57
  • Aug 28, 2007 9:27am Aug 28, 2007 9:27am
Hope I would not be a lone ranger in this thread. Anyway, my euro position was stopped out overnight with 40 pips up. Long yen has nicely reached the target - 120 pips up. Good volatility. I am short euro again from 1.3666 - target is the same as before. Good luck.
I am a very humble trader Up 380 pips - two trades.
  • #58
  • Aug 28, 2007 10:00am Aug 28, 2007 10:00am
I read the recent market actions as follows:

1). The recent rally in yen crosses and euro was due to resumed investors' optimism based on July home sales numbers. However, the numbers came out with a month delay, i.e. before the credit meltdown. As such the optimism was destined to be short-lived.

2). Today's S&P analysis only proves that the decline in housing prices is only escalating, hence, yen is going stronger. I am sure the Commercials have been buying yen all along as this Monday. No doomsday of course but the increased trend in housing slump may affect high-yielders vs dollar.

Just my thoughts.
I am a very humble trader Up 380 pips - two trades.
  • #59
  • Aug 28, 2007 11:46am Aug 28, 2007 11:46am
nice trade!
I'm down 150 pips now from the 500 pips I made last week. No biggy, I'll stay at least till FOMC.
Take a report.
  • #60
  • Aug 28, 2007 11:59am Aug 28, 2007 11:59am
Quoting CateFul
nice trade!
I'm down 150 pips now from the 500 pips I made last week. No biggy, I'll stay at least till FOMC.
yep, last week's was definitely a strong signal for euro longs, yen shorts. Glad you caught the ride. I am up 200 pips so far - no boasting. No new yen long position for me as the target was reached. I am still short euro. Wish me good luck.
I am a very humble trader Up 380 pips - two trades.
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