COT Weekly Trading Strategy | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Weekly COT report Analysis + Trade Ideas 13,191 replies

COT trading system with free indicator 297 replies

Trading COT Report 48 replies

100 Weekly Pips Trading Strategy 72 replies

COT strategy development. 9 replies

Attachments: COT Weekly Trading Strategy
Exit Attachments

COT Weekly Trading Strategy

  • #1
  • First Post: Edited Sep 24, 2007 6:54pm Apr 21, 2007 10:40pm | Edited Sep 24, 2007 6:54pm
Hi all,

I decide to post new trading strategy idea basic on COT report for attracting people to help out at improvement and back test.

Your opinion is very important to me.

Thanks.


John Tsai
04-21-07
Attached File(s)
File Type: doc COT WEEKLY TRADING STRATEGY.doc   189 KB | 14,557 downloads
  • #2
  • Apr 22, 2007 1:39am Apr 22, 2007 1:39am
Thanks John for that info on COT. I see COT as useful from a long term perspective. You need to look at the trend changes taking up to 4 months to really fulfill the range of momentum. The distinguishing factor of this report is the separation of commercial and non-commercial parties. When trading any market you need to realize that it is the commercial money that changes direction. Not a whole band of small or medium sized traders trading in the same manner. Extreme levels on COT contracts can be seen through out any give year on the any futures market, but the key point is where will the bigger money start to come in to play against the overall trend.
  • #3
  • Apr 22, 2007 4:33am Apr 22, 2007 4:33am
Sometimes i use COT charts to determin the currency strength over long-term, but i never used their reports. I read that this is somehow comparable to volume data for stocks (according to investopedia)
Be sure i'll check this thread out
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #4
  • Apr 22, 2007 5:15am Apr 22, 2007 5:15am
If u would prefer to look at charts........do a yahoo search for

freecotcharts

regards fxloot
  • #5
  • Apr 22, 2007 3:19pm Apr 22, 2007 3:19pm
Quoting pippy le pur
Thanks John for that info on COT. I see COT as useful from a long term perspective. You need to look at the trend changes taking up to 4 months to really fulfill the range of momentum. The distinguishing factor of this report is the separation of commercial and non-commercial parties. When trading any market you need to realize that it is the commercial money that changes direction. Not a whole band of small or medium sized traders trading in the same manner. Extreme levels on COT contracts can be seen through out any give year on the any futures market, but the key point is where will the bigger money start to come in to play against the overall trend.
I understand the COT report is for long term use, but somehow, I found a pattern of oportunity. It is whenever the Non-Commercial trader add the contracts into certain position, the currency will go opposite way for the following week.

I will do more back test when I have time to see this concept can be more reliable or not.
  • #6
  • Apr 22, 2007 4:03pm Apr 22, 2007 4:03pm
Here's the most recent COT for the GBP.
I guess this means to go short tonight.
Let's watch it and see what happens.


BRITISH POUND STERLING - CHICAGO MERCANTILE EXCHANGE Code-096742
OPTION AND FUTURES COMBINED POSITIONS AS OF 04/17/07 |
--------------------------------------------------------------| NONREPORTABLE
NON-COMMERCIAL | COMMERCIAL | TOTAL | POSITIONS
--------------------------|-----------------|-----------------|-----------------
Long | Short |Spreads | Long | Short | Long | Short | Long | Short
--------------------------------------------------------------------------------
(CONTRACTS OF GBP 62,500) OPEN INTEREST: 146,258
COMMITMENTS
83,380 21,625 7,482 20,747 88,513 111,609 117,620 34,649 28,638

CHANGES FROM 04/10/07 (CHANGE IN OPEN INTEREST: 18,242)
13,140 1,061 3,021 -2,572 8,724 13,589 12,806 4,653 5,436
  • #7
  • Apr 23, 2007 12:45am Apr 23, 2007 12:45am
Quoting billbss
Here's the most recent COT for the GBP.
I guess this means to go short tonight.
Let's watch it and see what happens.


BRITISH POUND STERLING - CHICAGO MERCANTILE EXCHANGE Code-096742
OPTION AND FUTURES COMBINED POSITIONS AS OF 04/17/07 |
--------------------------------------------------------------| NONREPORTABLE
NON-COMMERCIAL | COMMERCIAL | TOTAL | POSITIONS
--------------------------|-----------------|-----------------|-----------------
Long | Short |Spreads | Long | Short | Long | Short | Long | Short
--------------------------------------------------------------------------------
(CONTRACTS OF GBP 62,500) OPEN INTEREST: 146,258
COMMITMENTS
83,380 21,625 7,482 20,747 88,513 111,609 117,620 34,649 28,638

CHANGES FROM 04/10/07 (CHANGE IN OPEN INTEREST: 18,242)
13,140 1,061 3,021 -2,572 8,724 13,589 12,806 4,653 5,436

The direction is correct, but I have some point want to point out.
1. The position is not for short term. The position should open at least a week in market or at least reach the 121 ext for target price.
2. The target price and stop loss rate is prefer to adjust as 1:2 or more is better.
3. The attachment is what I will expect. But risk and profit is not good enough. If the risk is acceptable, I will go for the profit even ratio is less then 1.
Attached Image (click to enlarge)
Click to Enlarge Name: gbpusd042307.jpg Size: 30 KB
  • #8
  • Apr 23, 2007 12:53am Apr 23, 2007 12:53am
This is the back test I just finished from Jan-Mar 2006.

I switch the time frame to 4h in order to get more reliable stop and target.

The good news is from those test, the average profit is 300+pip/month with only one loss. ; Only calculate the average of profit basically on riskrofit ratio is more the 1:>1

I will take time and finish test the rest of year.
Attached Image
  • #9
  • Apr 23, 2007 10:52am Apr 23, 2007 10:52am
Hi, this idea of trading seems very interesting and probably its quite a classical approach, used by traders who dont rely on technicals to trade.

Could you explain how you read the COT information every week? or maybe provide a link where its explained how to interpret the COT data for the next week?

For ex, for the week 26.03 - 2.4 the Open interest was -47367. Does it mean something, like a reversal maybe? Also when both net long and net short are negative, which one do you consider in order to take a position? (i.e. net longs - 7040 net shorts -262).
besides, when net long is negative and net short is positive, u take the positive one in consideration? i mean because net short is positive, hence bigger, u go long next week?

Thanx and sorry for asking so many questions.
We leave no soldier behind.
  • #10
  • Apr 23, 2007 11:35am Apr 23, 2007 11:35am
Quoting johntsai
The direction is correct, but I have some point want to point out.
1. The position is not for short term. The position should open at least a week in market or at least reach the 121 ext for target price.
2. The target price and stop loss rate is prefer to adjust as 1:2 or more is better.
3. The attachment is what I will expect. But risk and profit is not good enough. If the risk is acceptable, I will go for the profit even ratio is less then 1.
You lost me with that.
I think you need to simplify and firm up your SL and PT calculations. They're too discretionary for use in a system.
Just a suggestion.
  • #11
  • Apr 23, 2007 11:53am Apr 23, 2007 11:53am
Quoting gagiul
Could you explain how you read the COT information every week? or maybe provide a link where its explained how to interpret the COT data for the next week?
here is a link where you can find a COT report trading tutorial
http://www.investopedia.com/articles.../COTreport.asp
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #12
  • Apr 23, 2007 10:50pm Apr 23, 2007 10:50pm
Quoting gagiul
Hi, this idea of trading seems very interesting and probably its quite a classical approach, used by traders who dont rely on technicals to trade.

Could you explain how you read the COT information every week? or maybe provide a link where its explained how to interpret the COT data for the next week?

For ex, for the week 26.03 - 2.4 the Open interest was -47367. Does it mean something, like a reversal maybe? Also when both net long and net short are negative, which one do you consider in order to take a position? (i.e. net longs - 7040 net shorts -262).
besides, when net long is negative and net short is positive, u take the positive one in consideration? i mean because net short is positive, hence bigger, u go long next week?

Thanx and sorry for asking so many questions.

1. Actually the report will confirm with technicals for sure. I will update the new version of file soon.

2. As the file explain, I only read the positive open interest change which is more meaning for. Because you want to go where is the money in instead of where is the money out. I just found coincedent of the amount. For more detail explain on the report, I do not use them at all.

p.s. you might want to check out the people in long and people in short at bottom of each report. that sounds interesting to see where people upto.
  • #13
  • Apr 23, 2007 10:53pm Apr 23, 2007 10:53pm
Quoting billbss
You lost me with that.
I think you need to simplify and firm up your SL and PT calculations. They're too discretionary for use in a system.
Just a suggestion.
sorry to hear that.

but the point i want to point out is
1. cot report in this system is useful for a week. (this is the fartest i go)
2. i only use latest swing high and swing low in 4 hour time frame to setup the stop and target by using 121 extension.

if it not clear enough, please let me know.
  • #14
  • Apr 23, 2007 10:58pm Apr 23, 2007 10:58pm
This pic is update for target price reached by using the system

couple update
1. in the picture, the second swing low to high is not the more updated one, this will cause more risk and time to reach 121 ext level. Because i draw in hurry and miss this part. eventhough, it still work very nice.

2. update version of cot weekly trading strategy ebook will come out soon with some update information.
Attached Image (click to enlarge)
Click to Enlarge Name: 01.jpg Size: 53 KB
  • #15
  • Apr 24, 2007 3:07am Apr 24, 2007 3:07am
Hi, thanx a lot for the help. I especially like using COT to determine my view for the week, as I suppose that many serious traders rely on it when they make their decisions for the week.

I mainly trade GBP - JPY, so I just checked both JPY and GBP COT reports, and I think they show interesting insight:

GBP - longs 13.140 shorts 1061 Open interest 18.241 going up, so it means that we should sell GBP this week, and because open interest is increasing this shows more people opening more positions, I suppose on the short side.

JPY - longs 805 shorts 6236 Open interest 5422 and rising, so my view is a JPY bullish approach for the week, also supported by rising open interest.

As a conclusion, my opinion would be to sell GBP / JPY during this week. Am I correct?
We leave no soldier behind.
  • #16
  • Apr 24, 2007 12:35pm Apr 24, 2007 12:35pm
Quoting gagiul
Hi, thanx a lot for the help. I especially like using COT to determine my view for the week, as I suppose that many serious traders rely on it when they make their decisions for the week.

I mainly trade GBP - JPY, so I just checked both JPY and GBP COT reports, and I think they show interesting insight:

GBP - longs 13.140 shorts 1061 Open interest 18.241 going up, so it means that we should sell GBP this week, and because open interest is increasing this shows more people opening more positions, I suppose on the short side.

JPY - longs 805 shorts 6236 Open interest 5422 and rising, so my view is a JPY bullish approach for the week, also supported by rising open interest.

As a conclusion, my opinion would be to sell GBP / JPY during this week. Am I correct?

The direction of GBP/USD is short, and this is correct. But the bottom line is please always check with MACD or CCI 50(this is what I use, and new version of ebook will included it) if it shown the short sign.

As the last update I post yesterday, GBP/USD fullfill the target price already from the position open at Sunday, and the purpose of this system had fullfill.

If you want to keep trading for the rest of week, I will recommend you go with the familiar trigger to do so.

The direction of USD/JPY is short, but I did not rely on the open interest amount less then 10,000. If you find the system works well even the amount is less then that, please let me know so I can take another look at that.

Even only trade with the amount >10,000, the average of pips already reach 300+/month.( this return number is from the manul back test from Jan-Mar 2006 I did at last post)

Last, just remember one thing, the purpose of this strategy is catch the first wave of the week, and only trade once a week. The position should be open at Sunday ONLY. If you want to trade any other day beside it, please be very very careful and use the trigger you familiar with.
  • #17
  • Apr 24, 2007 12:48pm Apr 24, 2007 12:48pm
well, Im waiting for the new version of the ebook, with CCI and Macd.
We leave no soldier behind.
  • #18
  • Apr 24, 2007 12:50pm Apr 24, 2007 12:50pm
really intrigued about your method. can't wait to see more detail.
  • #19
  • Apr 24, 2007 1:40pm Apr 24, 2007 1:40pm
I use the COT data for a long term strategy. Most times you can follow the commercials especially when they go more than 100,000 contracts on one direction. Be careful though because at times price just does it's thing. I made some money following the commercials but also lost some. Overall I believe that a strategy can be developed around this information.
  • #20
  • Apr 24, 2007 2:06pm Apr 24, 2007 2:06pm
Quoting Scientist
I use the COT data for a long term strategy. Most times you can follow the commercials especially when they go more than 100,000 contracts on one direction. Be careful though because at times price just does it's thing. I made some money following the commercials but also lost some. Overall I believe that a strategy can be developed around this information.
Thank you for your information. For the bottom line, there is no perfect system on the earth. The thing we can do is pull out as much money as possible by eliminate the risk and profit ratio very well. I believe by doing this, we will have more stable growth in our bank.
0 traders viewing now