Attachments: Weekly COT report Analysis + Trade Ideas

Weekly COT report Analysis + Trade Ideas

#5,761
Jan 30, 2013 8:06pm Jan 30, 2013 8:06pm

Hyperion
Joined Mar 2011 | Status: Focus on the action not the outcome | 633 Posts

Chart update from NZD/CHF above. Reached the bottom but I prefer sell signals so will not be buying the bottom of this channel. Switching to just holding short Kiwi against the US and short Aussie against EUR and US.

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#5,762
Jan 31, 2013 3:03am Jan 31, 2013 3:03am

tpaulbeaumon
| Joined Mar 2010 | Status: Trader | 165 Posts

Quoting Forexgogo

Disliked

shahab8b
[...](2) Where do you get a nice COT chart like this?

Thank you very much in advance!

Ignored

It looks like it may be from a Lloyds Bank UK report, they have lots of free reports, including technical trade ideas, but theyre not very good haha

http://www.lloydsbankwholesale.com/Economic-Research/

#5,763
Feb 14, 2013 2:16pm Feb 14, 2013 2:16pm

Hyperion
Joined Mar 2011 | Status: Focus on the action not the outcome | 633 Posts

Quoting Hyperion

Disliked

This channel looks very interesting to me. If the CHF keeps weakening and this falls, that translates to a VERY weak Kiwi Dollar. Disclosure: I am short Kiwi

Ignored

Rinse and repeat? Kiwi/Swiss shorts again anyone?

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#5,764
Feb 17, 2013 8:17pm Feb 17, 2013 8:17pm

Amadeus8
| Joined Feb 2013 | Status: Trader | 67 Posts

I will appreciate if somebody could explain me how to interpret the COT report effectively for my medium-long term trades.

What I understand is that the more positions the Non-commercial traders add to a trend direction the more chances are for a trend reversal.

For example if 86% of the total non commercial positions are long we could expect the trend to go down soon and viceversa?

If this week the non- comercial positions change from net short to net long? (sign change) can we go long? Does that mean that all traders will go long?

I read in another thread that if non- commercial traders add positions to one side of the market we have to go in the opposite side. Is that true?

For example: Nnn- commercials added 5000 long positions in GBP this week. Does that mean that the the GBP/USD will be bearish the following week?

#5,765
Feb 21, 2013 3:13pm Feb 21, 2013 3:13pm

Hyperion
Joined Mar 2011 | Status: Focus on the action not the outcome | 633 Posts

Hi Amedeus,
I don't think you can take it that literally. It's easy to be too contrarian when using COT reports. I view it as information which can colour my fundemental view rather than a trigger for something to happen. For example, open interest rising every day week or month, can go for some time especially if all the momentum accounts are pyrimiding into a position. To fade that can be disasterous. However, knowing that a long or short position is at a historical extreme can make me want to get out of that party if I'm with them and then look to fade it but only at critical levels which if broken would make the open contracts rush for an exit. Also the information is not realtime because it's released on Friday (at the close I think) but that is the number for the previous Tuesday. You can generally tell from the price action from Tuesday to Friday what's happened in terms of who is getting in or out though. Hope that helps.

#5,766
Feb 21, 2013 11:29pm Feb 21, 2013 11:29pm

mypipbull
Joined Mar 2009 | Status: Trader | 1,052 Posts

Quoting Hyperion

Disliked

Hi Amedeus,
I don't think you can take it that literally. It's easy to be too contrarian when using COT reports. I view it as information which can colour my fundemental view rather than a trigger for something to happen. For example, open interest rising every day week or month, can go for some time especially if all the momentum accounts are pyrimiding into a position. To fade that can be disasterous. However, knowing that a long or short position is at a historical extreme can make me want to get out of that party if I'm with them and then look...

Ignored

Hyper,

Well explained.

To support this, say for example the Commercial net positioning is at a bullish extreme you don't just get long because that will empty your account (The Yen has been a classic for that over recent months) you wait for the existing (well established) trend to turn then get involved.

However, before this ultimate trend change occurs you could fade that Comm extreme signal by selling (providing the trend is still down) but you have to be aware that you are getting into the trend late (not always a bad thing) and you should be more strict on the Risk/Reward potential. Then when the Comm net positions start flipping (new trend emerging) then you exit and get on board with the new trend as the COT reversal plays out.

Hope I have not muddied the water too much here.

#5,767
Feb 22, 2013 10:49am Feb 22, 2013 10:49am

Amadeus8
| Joined Feb 2013 | Status: Trader | 67 Posts

Hyperion and Mypipbull thank you guys. I wouldnt take a trade just based on the COT. I would confirm a trend reversal with technical analysis and my trading system.

Mypipbull why do you follow the commercial positions?. I thought that we have to follow the Non-comm.

If I am wrong correct me in this one. Lets say that non-comm are adding long positions, open interest is rising and the net positions are just half way to be extreme bullish for GBP. Dont you guys think that taking long positions is less risky than taking short positions in GBP pairs?

#5,768
Feb 22, 2013 12:18pm Feb 22, 2013 12:18pm

tpaulbeaumon
| Joined Mar 2010 | Status: Trader | 165 Posts

Hey chaps, FWIW, i consider COT figs anecdotal evidence, disregard the commercial positions, and as Shahab has shown many times if you look back on this thread, seeing price and non-comm position divergence can be a good warning sign of a change in trend, especially for EU.

The contrarian approach is more applicable when looking at retail gamblers - sorry traders - positioning.

#5,769
Feb 22, 2013 11:47pm Feb 22, 2013 11:47pm

mypipbull
Joined Mar 2009 | Status: Trader | 1,052 Posts

Quoting Amadeus8

Disliked

Hyperion and Mypipbull thank you guys. I wouldnt take a trade just based on the COT. I would confirm a trend reversal with technical analysis and my trading system.

Mypipbull why do you follow the commercial positions?. I thought that we have to follow the Non-comm.

If I am wrong correct me in this one. Lets say that non-comm are adding long positions, open interest is rising and the net positions are just half way to be extreme bullish for GBP. Dont you guys think that taking long positions is less risky than taking short positions in GBP...

Ignored

Sorry for the confusion, I do not take the same positions as the Comms if that's what you mean, I do follow the extreme Comm positioning for potential signals instead of the Non Comms.
I trade and interpret COT differently to this thread. I probably should have kept my comments to myself.

Your last statement regarding the GBP is correct in my opinion anyway.

#5,770
Feb 24, 2013 2:35pm Feb 24, 2013 2:35pm

Amadeus8
| Joined Feb 2013 | Status: Trader | 67 Posts

Hello everyone...According to the COT report, this week the large speculators switch from net long to net short for the CHF..so I think that we can expect a future uptrend for the USDCHF...look at the chart at cotbase or barchart, large speculators crossed the zero line ...What do you guys think?

#5,771
Feb 24, 2013 2:38pm Feb 24, 2013 2:38pm

Hyperion
Joined Mar 2011 | Status: Focus on the action not the outcome | 633 Posts

I only take notice when things are at an extreme. Who knows how far the conversion process from long to short can run? However when a long or short position is at historical extremes, you can be on alert for an un-wind.

#5,772
Feb 24, 2013 3:01pm Feb 24, 2013 3:01pm

tomspin
| Joined Dec 2011 | Status: Trader | 2,927 Posts

really nice thread

How about looking at major swings on weekly and cross check with COT positions and how balance they become before trend is changing - my simple observation of market,
What I mean is using COT as an indicator for the upcoming swing.
Does anybody notice this relation?
regards
Tom

swing it!

#5,773
Mar 17, 2013 1:51am Mar 17, 2013 1:51am

samir45
| Joined Aug 2009 | Status: Trader | 112 Posts

Where is Shahab ?? Does anyone know.

#5,774
Mar 19, 2013 7:53am Mar 19, 2013 7:53am

shahab8b
Joined Jul 2009 | Status: The Alchemist | 8,917 Posts

It seems we might see a deeper correction in UJ given the divergence.

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#5,775
Mar 19, 2013 8:07am Mar 19, 2013 8:07am

shahab8b
Joined Jul 2009 | Status: The Alchemist | 8,917 Posts

I think we are about to see a long term top in equities sooner than later.looking at S&P future, it might go a bit higher from this level, but a sharp fall will be inevitable. That can be explained both fundamentally and technically.

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