COT Charts, Great Info?
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Thread: COT Charts, Great Info?

  1. #1
    Hi,

    My name is Jon and I have been a forum reader for three years. Lately during the past year my trading has become consistently profitable. I still have a lot of work to do but I am pleased with my progress. Over the next year I would love to write my thoughts from the forums for the purpose of: creating myself a much better trader through greater comprehension of my own methods, sharing my thoughts for the benefit of other people, and sharing my thoughts for constructive criticism. Ninety nine percent of what I state isn't original. My thoughts are gathered from a wide spectrum sources and that I want to thank everybody who shares their understanding.

    Before starting I want to highlight the gap between technical and fundamental analysis. Both methods are essential for my profitability. Fundamental analysis helps me know who has the ability on the market. As from the dollar bears currently have the ability on the market. Understanding where the strength comes from in fundamental terms enables me to trade confidently. I can stay out of this market and wait for opportunities to present themselves, or that I can enter the transaction quickly the moment my technicals provide me the okay. When I first started trading I might have shorted something as easily as I might have gone . Usually I was able to provide evidence that encouraged both a long and a brief position in the exact same time. I believe that came from relying solely on technical analysis.

    With that said, I love technical analysis. It is a real money maker. I tried to trade using only fundamental analysis, also that I discovered that without skilled chart reading I could not find proper places to go into the market. Additionally, I rode out many a change waiting for the overall trend to shoot over again. Technical analysis has enabled me to trade confidently with the fad and even contrary to it. Currently I am trading the dollar long even though I feel the general dollar market is negative.

    As a new trader I did not know how to effectively use fundamental analysis. Technical analysis was easy to learn and easy to apply. Often I could draw a technical image of the market in half an hour. Honestly, fundamental analysis is just as easy to use. Like anything else it takes discipline. The key to fundamental analysis is getting over the learning curve. Like technicals it was hard to determine where I should apply most of my effort. It was difficult for me to find out which pieces of fundamental data were actually driving the market. Finally I feel all traders ought to be able to spell out on a basic level exactly what the following mean: cot data, key interest rates, current account, gdp, cpi, net capital flows, government finances, and foreign exchange reserves. I might have missed some but it is a start. It is likewise true that one thing could possibly be significant for Japan and not as significant for Canada. Luckily The forum does a fantastic job of providing us resources, member support, along with a glossary eduion.

    Using fundamentals isn't time consuming. Learning fundamentals can be time consuming. I recommend spending fifteen to thirty minutes per day reading anything you can get your hands on, such as: The Economist, IBD, Wall Street Journal, Financial Times, Wikipedia, Investopedia, Bloomberg.com, Baby Pips, forum, and also the sites of the Major Central Banks. There are lots more resources, in reality, utilizing Google is a quick and effortless way to loe info on any topic. After a while you will make a database within your mind. You will find that from day one you will be more edued and will make superior decisions. Soon you will realize that your understanding of earth and its own financial markets is extensive and you will be amazed at how little effort it needed to learn. As soon as you have a wide but shallow comprehension of the market I feel you have sufficient knowledge to effectively use fundamentals when making trading decisions. At this point all the hard work is behind you. You simply devote a small amount of time each day or week to keep yourself up to date on any changes in the fundamental picture. Fundamentals change slowly so most folks will likely spend more time reading charts than fretting about the way the rising Yuan will impact the Yen. I like reading and watching financial media, therefore, the amount of time I dedie to the fundamentals may seem disgusting to most people. When I wanted to I could probably get all of the information I had in just five minutes a day.
    Recall this, the key to fundamentals is to draw a broad, generalized image on paper or on your head that clarifies market conditions. Do not let yourself believe that other traders are privy to information also that since you lack this information you're trading from an inferior position. That could occur with a stock, but using something such as a global currency we all possess the essential information to earn money. What sets people apart is there technical ability and their confidence.

    We have that from the way, here is what I consider to be the first of two very significant factors that I use to draw a fundamental image of this market. You will find more second grade variables that I will describe later on.
    Recall I am putting this out here for your own thoughts. Assess and use this advice then return to me with your outcomes.

    In order to use this information you will have to go to this site and set your charts up accordingly.

    Timingcharts.com

    The default chart is always the S and P chart. Change the top portion to:
    Commodity:to whichever one you would like to analyze. I use Globex.
    Change Daily to Weekly.
    Change History to 2 to five years.
    I alter Price Overlay to none.
    I alter Chart Form to Candlestick.
    At the bottom of the page that I eliminate the Red Specs lineup by unclicking the box, in my view you do not want to follow these guys.

    For additional directions you can sort describe cot charts into google and try to find any one of a range of websites dedied to describing cot chart analysis. My only advice is keep it simple not complied. I used this website to double check myself http://www.tradefutures.co.uk/power_of_cot_charts.htm, I do not recall the first website I used to find out cot analysis.

    This is the way I read these charts:

    Rule 1. When the green line is above the blue line I tend to go long.
    Rule two. When the green line is below the blue line I tend to go brief.

    Recall that I only use this information to draw a broad picture of this market. For some currencies the image will be very clear. . .feel convinced to trade people currencies more. At times the picture will be confusing. If confused, either wait a week or two for the chart to clean up or keep in mind that you ought to rely on chart reading to comprehend the current direction of the market and that COT Data is simply a extensive tool.

    In addition to principles one and two there are other ways to browse the green line. Follow the slope of this line, especially if:

    the lineup just shifted directions or
    the line came out of an extreme place and is heading straight back to the zero line.

    Be aware of double tops and bottoms.

    Please do not try to use anything that I say as a means of forecasting the future management of a specific currency. We're followers. Examine these charts and use technical analysis to guide you in and out of this market. These charts and other data should make you feel comfortable about being short or long a certain tool.

    Recall that all these charts are the AUD/USD, CHF/USD, JPY/USD, etc.. This is the way the currencies list on the futures market, which is where this data comes from. You'll have to invert the JPY and CHF chart in order to orient the COT charts to your Forex Broker charts. It gets a bit trickier if you try and use this data to decide which direction to trade among the crosses, ie the GBP/CHF.

    Why the COT data? Some out there might be wondering why Futures data is useful to our OTC market. The spot market does not provide us quantity data. This is the only place we could get mass information, as they say, it is better than nothing.

    Why follow large traders rather than commerical traders? I've noticed that some websites/organizations use these terms interchangeably. For the purposes of the post I use the very same conditions as the site timingcharts.com. From my understanding commerical traders are banks or other associations whose purpose from the futures market is to buy an insurance plan in the kind of a futures contract. The large traders market that insurance policy and in lui of payment they recieve an opportunity to profit in the risk they assume and they determine the prices on the market. When the bulls are in charge the market goes up and when the bears are in charge the market goes down. We know who's in charge by reading the bottom of the page (timingcharts.com)under the chart where it says Net Position. We're trading with the Internet Position. This means we're taking the long positions of this trader egories and subtracting the short places to see if the major traders are net short or long. The two sides become 11, if you add from the speculators. There always needs to be a buyer for each seller. Proceed to http://www.cftc.gov/for more info and the actual COT Data.

    COT data comes out every Tuesday, but the charts dont update until Friday. As I mentioned earlier, fundamentals do not change quickly. This information is a week behind, but that shouldn't make a big difference.

    I hope I covered everything. When I did miss anything you ought to have the ability to find it out by just looking at the COT Charts or by asking queries. As soon as I started with the COT Charts I looked in them daily for a deep comprehension, now I look at them once weekly.

  2. #2
    Keesee, very good suggestion about the best way to utilize COT data. In addition, I use it as a benchmark I use the default settings and transaction the direction of the green line, and usually go long in service when green line's over 0 and vice versa.
    I think when u follow the large traders, u will be safer

  3. #3
    Hey I started a blog, it might be hard to read. . .it will get clearer the longer I take action.

    http://forexdailydigest.blogspot.com/

  4. #4

  5. #5
    Quote Originally Posted by ;
    Folks Reading This Thread

    Do You Wish To Think About Fundamentals When You Trade or Do You Just Want To Think About Technical Analysis?

    Does This COT Info Help You Imagine A Fundamental Picture Of The Market?

    Please Post A Response.
    Absolutely YES!

    Amazing thread!

    As a newbie trader (I know this word may get chills to a number of the knowledgeable traders...) on Forex, and coming from a expertise on stocks trading, in which fundamental analysis is much stronger, I just can not imagine trading anything with no huge picture of what is happening, and which forces are driving the market. Especially at this market, I believe that we are little pilot-fishes trying hard to swim with the big sharks (the true trend manufacturers ). If we attempt to stay ahead, perhaps we can find some success, but we have to be cautious to not become shark food. If we go way behind, we might have nothing more to eat... We have to attempt to swim side by side with all the sharks, and revel in the trip...



    Greetings!

  6. #6
    This is a really good thread to poor its practically dead, does anyone else use COT charts because of their trading?

  7. #7
    Quote Originally Posted by ;
    That is a really good thread to poor its practically dead, does anybody else use COT charts for their trading?
    Not yet, I gotta consume the concept first afterward. . .maybe...

  8. #8
    Quote Originally Posted by ;
    This is a excellent thread to poor its practically dead, does anyone use COT charts because of their own trading?
    Thanks CHR5648, for posting and put life back to this thread. I will keep my eye on the COT data every friday from now on.

    If I see something I like I will return here and post it.

  9. #9
    Quote Originally Posted by ;
    Thank you CHR5648, for post and put life back to this thread. I will keep my attention to the COT data every friday from now on.

    If I find something I like I will return here and post it.
    Hi all....COT data looks interesting, too bad keesee isn't active here any longer...I'm really looking forward to learn from what's there on net about COT and now we can talk about here...

  10. #10
    Why trade with week old COT information when there is live belief data charted and upgrading every 30min http://rpmfx.blogspot.com. I have also created a section on trading using opinion and videos are in the works as well, enjoy

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