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  • #51,921
  • Edited 4:02pm Sep 1, 2012 3:40pm | Edited 4:02pm
For those number crunchers see the post following this one on COT numbers. I have the spreadsheet to manipulate and run averages going back to 2005 if needed just PM me. For those visual people who just want to see the chart here is PROOF that COMMERCIAL and NONCOMMERCIAL play separate rolls when it comes to rising and falling currency markets.
If they played the same role you would not divergence between net longs shorts between the two types.
Fact: Commercial HEDGERS will be flat to Negative (short) when a market is rising and will be LONG or increase longs when the market is Falling.
Fact: Non Commercial or large traders: will go where the market goes. So they Will be long (+open interest contracts) when the market is rising and short (-open interest contracts) when the markets is falling. Although sometimes they are late or early on the tides and turns.
This if pure fact and simple corporate Finance principals that hedgers/speculators know. I tell you guys all this because there is so much misinformation and sloppiness when people report matters on the markets and I will not contribute half information or stand back while it’s being spouted incorrectly. There is already enough BS in the media and financial markets that were told each day let s not be the one's to do it to eachother.
(if the pic is blurry refer here to the main site http://finviz.com/futures_charts.ashx?t=6A&p=d1)

Attached File(s)
File Type: docx COT.docx   53 KB | 262 downloads
  • #51,922
  • Edited 4:32pm Sep 1, 2012 3:44pm | Edited 4:32pm
This is the hard data for those number crunchers on COT reports since around the Top July 31..It takes a lot of work to be competent trader and if any of you decide to manage money, giving vague answers or charts that you claim to be fact without a basis won't fly believe me.
.



Since July 24th 2012 here was the change in Position sizing (options futures combined)
July 31, 2012 report
Non- Commercials
Longs: +12,970 Shorts: +1,470 Spreading: +3,094


Commercials
Long: -3,439 Short: +13,486

Non Reportable:
Long: +4,672 Short: -753
Source: http://cftc.gov/files/dea/cotarchives/2012/options/deacmelof073112.htm


Since July 31, 2012 here was the change in position sizing (options futures combined)
August 7, 2012 Report
Non-Commercials
Long: +15,263 Short: -129 Spreading: -4,786


Commercial
Long: -2,568 Short: +16,386

Non Reportable:
Long: + 7269 Short + 708
Source: http://cftc.gov/files/dea/cotarchives/2012/options/deacmesof080712.htm

Since August 7, 2012 Report here was the change in position sizing (options futures combined)
August 14, 2012
Non-Commercials
Long: +12,121 Short: + 1,543 Spreading: +4,775


Commercials:
Long: -1986 Short: +12,401

Non Reportable
Long: +567 Short: -542
Source: http://cftc.gov/files/dea/cotarchives/2012/options/deacmelof081412.htm


Since August 14, 2012 Report here was the change in position sizing (options futures combined)
August 21, 2012 Report
Non Commercial
Long: +17,628 Short: -3150 Spreading: 907


Commercials:
Long: +1,394 Short: +24,230

Non Reportable
Long: +1,365 Short: -693
Source: http://cftc.gov/files/dea/cotarchives/2012/options/deacmelof082112.htm


Since August 21, 2012 Report here was the change in position sizing (options futures combined)
August 28, 2012 Report
Non Commercial
Long: -2,968 Short: +5,728 Spreading: +7,092


Commercials:
Long: +1,904 Short: -8,334

Non Reportable:
Long: -2,577 Short: -1,037
Source: http://cftc.gov/dea/options/deacmelof.htm



Since July 31, 2012- August 28, 2012 Report’s Here is the total (options,futures) Net Short and Long position for bot he Commercials and Non commercial’s combined
(Long noncommercial+ spreading +Long Commercial) and Vice Versa for Shorts
July 31, 2012
Total: (excluding Non-Reportable)
Long: 132,885 (79,194+ 8,676+ 45,015)
Short: 137,473 (41,880 + 8676+86,917)
Non Commercial was net long and Commercial was Net short combined Net short was the Bias
Source: http://cftc.gov/files/dea/cotarchives/2012/options/deacmelof073112.htm
Fast Forward to This Last Friday’s Report…..

August 28, 2012
Total: (excluding Non-Reportable)
Long: 175,089 (124,238+7,092+43,759)
Short: 184,566 (45,873+7,092+131,600)

Since July 31-Aug 28 in AUD/USD here is the Net Longs and Net Shorts Total have increased by (excluding nonreportable):
LONG: 132,885+ 175,089= + 42,204
Short: 137,473+ 184,566= +47,093
  • #51,923
  • Sep 1, 2012 3:57pm Sep 1, 2012 3:57pm
JPLazard,

Thank you for posting all of this information! I definitely see the correlation with commercial long positions when price drops and commercial short positions when price rises.

You are right on with your assessment, they do this to hedge themselves. I don't know exactly how/why they do this, but this is how it works with most major currency pairs.

It looks to me that this is further confirmation that we are on the right side of the trend.

Keep up the good work!
  • #51,924
  • Sep 1, 2012 4:13pm Sep 1, 2012 4:13pm
100pips,

Id be happy to explain to you one of these days via PM, email, Skype how they do it and some of the ways they structure these hedges if you are ever interested. (Although I will say it is like a finance class very boring at times lol) But I will always try to keep it in simplest form and relate it to current charts. That chart alone shows that if Commercials are long or increasing longs it does not mean that they are Hoping for a higher currency rate but that they are protecting current streams of cash flows by locking in their profits at that point in time as the PAIR IS FALLING.

We are on the right side and will be so at 1.02 and 1.0150 possibly lower if the chart and numbers still favor bears.

Best of luck at the open and I will see you all here for the gap either way
  • #51,925
  • Sep 1, 2012 4:17pm Sep 1, 2012 4:17pm
Or another reason to hedge is future payments for products or services they will be recieving x' months down the road.

here is a quick study on COT analysis short and informative.

http://www.investopedia.com/articles...#axzz25FsTP3Pm
  • #51,926
  • Sep 1, 2012 9:08pm Sep 1, 2012 9:08pm
JPLazard,

Thanks again for the info, I'm going to read the link you posted.

By the way, I sent you a private message with Skype info. Thanks again for all of your contributions to this thread.
  • #51,927
  • Sep 2, 2012 2:06am Sep 2, 2012 2:06am
Question for JP Lazard, please. (or anyone else wishing to contribute)

It does appear that there will be not much of a gap down (if any)when trading starts for the week. In view of the poor China data which was announced after close, why would this be?
I figured maybe because the disappointing results had already been factored in? However, a little confused. Is it because there is much hedging by the big boys over the weekend?
Logic suggests a significant drop in the early part of the week, but markets seem determined to defy logic.....
views and explanations would be very welcome, and maybe help someone quite new to currency trading to understand more.
Thank you
Micder
  • #51,928
  • Sep 2, 2012 2:15am Sep 2, 2012 2:15am
Quoting micder
Question for JP Lazard, please. (or anyone else wishing to contribute)

It does appear that there will be not much of a gap down (if any)when trading starts for the week. In view of the poor China data which was announced after close, why would this be?
I figured maybe because the disappointing results had already been factored in? However, a little confused. Is it because there is much hedging by the big boys over the weekend?
Logic suggests a significant drop in the early part of the week, but markets seem determined to defy logic.....
views...
I agree with you the big boys got to much money on AUD.
could you please give me a link to check the movement of the price over the weekend.
Thanks
  • #51,929
  • Sep 2, 2012 2:36am Sep 2, 2012 2:36am
Quoting ibram.forex
I agree with you the big boys got to much money on AUD.
could you please give me a link to check the movement of the price over the weekend.
Thanks
There is not much "after hours" trading this weekend for any currency pair as far as I can tell.

Check the following link for after hours trading...

http://fxtrade.oanda.com/
  • #51,930
  • Sep 2, 2012 2:41am Sep 2, 2012 2:41am
Quoting 100PipsADay
There is not much "after hours" trading this weekend for any currency pair as far as I can tell.

Check the following link for after hours trading...

http://fxtrade.oanda.com/
Thank you. also check this one too.

http://forex.tradingcharts.com/chart/
  • #51,931
  • Sep 2, 2012 3:04am Sep 2, 2012 3:04am
Quoting ibram.forex
I agree with you the big boys got to much money on AUD.
could you please give me a link to check the movement of the price over the weekend.
Thanks
I've been using this one:http://www.xe.com/currencycharts/?fr...to=USD&view=1D
covers most of the major pairs.
I've noticed over the weekends that most activity seems to be just a few hours before opening, though.
  • #51,932
  • Sep 2, 2012 3:05am Sep 2, 2012 3:05am
Quoting micder
I've been using this one:http://www.xe.com/currencycharts/?fr...to=USD&view=1D
covers most of the major pairs.
I've noticed over the weekends that most activity seems to be just a few hours before opening, though.
Agreed! We'll have to see what happens tomorrow a few hours before market opens.
  • #51,933
  • Sep 2, 2012 3:25am Sep 2, 2012 3:25am
Quoting micder
Question for JP Lazard, please. (or anyone else wishing to contribute)

It does appear that there will be not much of a gap down (if any)when trading starts for the week. In view of the poor China data which was announced after close, why would this be?
I figured maybe because the disappointing results had already been factored in? However, a little confused. Is it because there is much hedging by the big boys over the weekend?
Logic suggests a significant drop in the early part of the week, but markets seem determined to defy logic.....
views...

China Aug official factory PMI falls, So Expect minimum 30 pips gap down
Oooooooooopppppppppssssssss
  • #51,934
  • Sep 2, 2012 9:29am Sep 2, 2012 9:29am
http://www.forexfactory.com/showthre...84#post5977284

EDIT: to the post above about the COT report and how it was reported by another trader in a different thread. The trader in question did get back to me and let me know that is was not correct and that he was just showing a snapshot. I have more respect for him than I did prior as people and flexible traders alike who make mistakes and I believe this was NOT intentional can admit the error and except respectful criticism. He has removed the Chart and I will show him the same respect and remove the post I made about the chart being incorrect.

PS.. I also wish to be shown errors I made or will continue to make so that I may learn from them. So if I say a half truth or make a bad trade call I will not take it personally when someone corrects me or shows me the opposite side I may have missed.
  • #51,935
  • Sep 2, 2012 9:44am Sep 2, 2012 9:44am
http://i48.tinypic.com/ws6a3a.jpg

I present to you my latest findings on the order flow of AUDUSD. Remember that currencies are the lifelines of the global economy. People buy and sell currencies all the time. If i wanted to travel to London to watch the 2012 Olympics, i would change my local currency into British pounds. Which means i would buy GBP and sell SGD. Basic supply and demand.

We individuals do not have the power to move the currencies by 1 pip. So who does? It is the multinational companies such as IBM, Apple, BMW, Samsung and others. Central banks can manipulate their countries' currencies. But they do it infrequently, although when they do it, it causes huge spikes. Witness BOJ intervening to weaken the YEN in 2011. Look up the daily chart of USDJPY and find the obvious one day spikes. It is the handicraft of Japan's central bank. Hedge funds can and also shift currencies to a certain extent. But their main aim is speculation and to make profits.

The main factor in currency movement is this. Watch the order flow by the multinational corporations. Every month, whether it is the beginning or the end of each month, they buy and sell currencies. Why? Because they need to settle their monthly accounts. They need to hedge their positions. They need to repatriate their profits. They need to pay their suppliers. They need to collect payment from their customers. Every month, every quarter, every year end, they have to tabulate their profits and losses into their balance sheets. And a host of other reasons.

To illustrate my findings, see the AUDUSD chart. Now locate the places where price makes a major turn. The tops and bottoms are located mostly on the month-end or month-start. It is not a coincidence. It is order-flow.

http://i47.tinypic.com/m8eg4j.png

I hope you understand the importance of order-flow now. Many traders talk on fundamental analysis (FA) and technical analysis (TA) when looking at the markets. I present to you the third analysis, order-flow analysis (OFA). Learn it well and you will become a more successful trader. Trading is a mind game.
  • #51,936
  • Sep 2, 2012 10:28am Sep 2, 2012 10:28am
Quoting micder
Question for JP Lazard, please. (or anyone else wishing to contribute)

It does appear that there will be not much of a gap down (if any)when trading starts for the week. In view of the poor China data which was announced after close, why would this be?
I figured maybe because the disappointing results had already been factored in? However, a little confused. Is it because there is much hedging by the big boys over the weekend?
Logic suggests a significant drop in the early part of the week, but markets seem determined to defy logic.....
views...
I didn't get any really cogent reply to this - maybe there is no explanation.
What I did notice though is that there was a brief (very) sharp dip to 1.2905 about 4-5 hours after Friday close, but it recovered to 1.32 within 15 minutes. Can anyone please explain these sudden large movements?..and more importantly, why the bounce back
  • #51,937
  • Sep 2, 2012 11:22am Sep 2, 2012 11:22am
Micder,

Apologies for the late response. As per your question on the price spikes they actually occur often and it is a couple things that cause this.
1.st Just like rollover on certain pairs each day you might notice a price spike and think your broker is screwing you. This is not the case at all during times when settlement/closes occur Big providers (banks, hedgies, commercial) will ‘PULL’ their quotes for a short time to either manage their risk or re price the pair slightly if their is a fixing. Generally you will see prices go back to the same price/spread after this ‘spike’ and no trades if you have an honest broker should execute stop losses or orders on this spike because it is happening during the close or settlement period. Also consider thisA spike can be a false price that did not actually takes place in trading, it usually occurs on weekends when M-East traders play with the prices. Most good brokers like I mentioned above don’t carry the data. Even if they did, it would not be considered a trade- in trading lingo this is called ‘outded’


2. Second this also happen in stocks to because of the same reason only the Market Makers or floor specialist are adjusting the ‘book’ or BBBO prices for next days opening. This happens during after-hours trading.
3. Fat Finger trades. This has happened in trading and in forex from personal experience of seeing it on a desk and it will happen again. Some trader executing on behalf of the bank or the client makes an error in numbers and buys the wrong Size causing spikes to occur but then they will come back and fix the error going back into the market and buying selling back the amount that was the mistake.
Watch apple, goog, amzn, pcln or watch some exotic currency pairs this week during NY close or rollover you will see a couple bad spikes which I mentioned.

Also send us a screenshot of what you were talking about on this particular pair I would love to see it and find out personally what happened I still talk to old colleagues from time to time who might be able to chime in.
  • #51,938
  • Sep 2, 2012 11:24am Sep 2, 2012 11:24am
To those that have Pm'ed me I will get to you very soon..
  • #51,939
  • Sep 2, 2012 11:29am Sep 2, 2012 11:29am
Hi JPL,
Can't show a screenshot, but on http://www.xe.com/currencycharts/?fr...to=USD&view=1D it clearly shows a price of 1.321 at 00.00 UTC on 01st Sept, at 00.15 it dips to 1.02905, and then at 00.30 back up to 1.321.

Interesting & informative reply to my general query, thank you:-)
It seems "out of hours" trades can be mostly discounted, then - esp. the spikes!
  • #51,940
  • Sep 2, 2012 12:03pm Sep 2, 2012 12:03pm
Wait, there's over the weekend trading? And you guys are actually showing where you get your information? Nice! Gotta dive into this.
Play the players, not the cards.
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