By popular demand of traders.
Hello friends!Today we will talk about one of the ways to find out: what positions occupied by large speculators and investment funds.After all, as you know, the forex market is driven by money.That is a lot of money.And to be more precise, it will be on the analysis of COT (Commitments of Traders) report provided by the Commission CFTC (US. Commodity Futures Trading Commission).From the video below you will learn what kind of reports, when and where to take them, and most importantly - how they can help us in trading.
Track the where are the big players -reports Analysis COT
Hello, ladies and gentlemen.In this article we will talk about the COT reports.
From these reports we can learn from what is now take the position as a whole, the major players in the forex.And, using this data to make better decisions about their own entrances, own transactio
So why do we need a movement of major players?The fact that the market is driven by money.And move a lot of money.Naturally, we lot, say 0.1, do not change anything.But the big players: the large traders, investment funds, banks, etc., pouring hundreds of millions of dollars in the market, causing large movements...And shove against such forces is often unwise.Therefore we can be useful knowledge about which side of the market is "Krupnyakov".
How do you know the position of the major players?
One way - this is the COT reports.Offered U.S. CFTC.
U.S.CFTC - an organization that ensures that there is no offense to trade in the futures market.And this organization accountable all the major players in the futures market.In turn, the commission puts in access reports, which are called «Commitments of Traders».We can just go to their site and view these reports without any obstacles.This free information in the public domain.Naturally, these reports from the futures market.A futures market - it's not all the players in the foreign exchange market.But we as a whole can make quite significant conclusions.
How do we get access to this report?
Go to the site «U.S.The CFTC ", find the« Market reports section "and select« Commitments of Traders ».
You should open here such here page:
find the headline CURRENT LEGACY REPORTS.Here, choose Chicago Mercantile Exchange section.There is a table consisting of several columns.We choose from the second column of Futures and Otions Combined.As we get more information.And select «Short Format».
Loading last report.Speaking of dates, please note that reports published on Friday, at the end of the week.But they represent a cross-section data on Tuesday.That is, we get the data with a delay of about 3 days.And as we obtain them in the evening, the use of these data, we can only at the beginning of the following week, together with the opening of the market.
In the report we can see the following parameters: «NON REPORTABLE POSITIONS», «TOTAL», «COMMERCIAL» and «NON-COMMERCIAL».
NON REPORTABLE POSITIONS - are small traders having insignificant position.They can not pay attention, because this "crowd" with small deposits.
NON-COMMERCIAL - this is nothing more than a large speculators.That is, banks or investment funds.As well as individuals with high net worth.Here you can see the division, the number of long and short positions.And as spreads.
Spreads - this is the opposite positions open at one and the same player.For example, to buy and sell at the same time.Perhaps this is part of some complicated strategies, as at the date of expiry of futures are different.Maybe something else.We are not particularly interested in it.But such data are available.
COMMERCIAL - This data hedgers.Data on sales representatives on the market that are not traded in order to somehow make money speculatively, and in their own interests.That is, some big companies.
For example, some companies do not benefit from rising prices for some raw materials required to manufacture their product.And they are, respectively, buying raw materials or currency in advance so that if the price will rise, have to supply their goods and do not overpay.Simply put, the commercial players do not play the market to snatch profit from changes in prices and act in their own interests.
In order to get into this category need to submit a special application to the Commission on the futures markets.And only after that you can take.But in recent years under this category are suitable not only large commercial organizations, but also for example, swap dealers in the banks as well fit into this category.
TOTAL - sum of long and short positions of the major players and commercial hedgers.For each item, there is a division between Long and Short.This division of the number of long and short positions.In this report a lot of information that we do not need.There is a range of products.We are interested in currency, so you need to scroll down to the report currency.
As we have CHANGES FROM data.
That is, change from the last report.What increased and diminished position in the Long and Short in different categories of traders.And also there are data on open interest.
Simply put, the open interest - the number of money in the market.
How to use data from the COT report?
In principle, it is possible to study the data directly from the report.But there are special resources on which all this is much more convenient organized.
One such resource: http://www.timingcharts.com/
Let's see how to use it.
So, what do we see when approaching the site?We immediately called to schedule.In this case, it is the Australian dollar.This can be changed, so do not worry.Let's see what we can do here.The first button in our currency - Symbol
can choose any currency that you require.Let's take for example, choose a pound.Then there is a Linked button.
It allows you to display the futures contracts, annexed to dates.Since it is known that they have different expiration dates.For those who like to experiment and delve into the settings, you can choose by months and days of the week.We do not need it, so leave active Linked.Next come the buttons D, W and M.
- D - daily charts
- W - weekly
- M - monthly
make active the field week, as the COT reports are updated once a week.For us, it will be more convenient.Next, you can choose design in the form of bars or candles.Switch to candles.
Next is a design background.Here already as it will be convenient for you.I changed to the light.
Next button - indicators.Here you can add technical indicators.For example, linear regression, moving averages, etc.
We particularly benefit from it is not.Because any technical analysis is more convenient to the terminal.Next COT button.This is just our reports.And Sentiment button.When you click on it there is the indicator window.This is the mood of the market.It is determined from the positions of traders.If the line is high, the bullish tone.If the bottom of the bear.
A different it will look at the daily charts:
The fact that this data on the positions of real traders.The problem is that it is not specified where they come from.Or they provide some broker or somehow they still receive the data.The site does not indicate this.I honestly do not know how useful it is to us, because we do not know the source.And, therefore, the analysis might be incorrect, incomplete and unreliable.But if you're interested, you can explore and find some patterns.In general, if you look at the market sentiment indicator, we can see that it is similar to motion graphics.But, again, not always.So, it is with regard to market sentiment.Below, you can choose between.By default, it is six months.You can choose three months, 3 years, 5 years, and so forth.
now proceed directly to that for which we have come to this site.Push button COT.
First of all we select the database.Futures Only or Options and Futures.Select Options and Futures because it is united and report data there is more three-dimensional.
Next is the Output column.
In it, we can choose a variety of indicators that will be displayed on the graph.
NetPositions - we immediately obtain data on the net positions of market players.How to calculate the net positions?A long position is subtracted short.For example, long positions 100 000 Short 50 000. This means that the net position is +50 000. If the length is 100 000 and 200 000 short, then the net position is -100 000. Simple arithmetic.Next comes the COT index.
In this case the lines are displayed on separate groups of players on a scale from 0 to 100. Depending on what kind of movement was last time interval.On average, for 26 weeks we get the COT index with which to work quite convenient.Then there is an index of motion in the form of bar graphs.
you need to select which data in a bar graph we want to see.The default is the display position of large speculators.You can select data from hedgers and small speculators.All at once there is a histogram view possible, because it would not be convenient.And there is another point custom.
where you can customize the COT indicator.It is possible to choose what to include in the chart.
So, we have shown the COT index.
Green Line - a large speculators
blue line - a commercial hedgers
Red line - a small speculators (the chart is now disabled)
We opened the British pound and the daily charts.Displays change for every Tuesday, as the data arrives just on this day.So when we translate on any day, on the scale does not change anything.But when we translate on Tuesday, the terms appear in our index COT.Changes in the last period, in this case for six months.Let's switch to the weekly chart for clarity.Since we still weekly report is provided only once.Before we analyze, we need to understand how to trade the big players like hedgers trade and how trade in small players.The big players tend to come at the beginning of the trend.When they begin to form.And come the end of the trend.
Commercial players can go against the trend, if it is in their best interest.And usually begin any active steps against the trend.And often a little more in advance of the moment the trend will manifest itself.Factors that are not available to ordinary people, but known hedgers, encourage them to take any action in advance.That is, suppose the purchase of futures on the pound.And thus protect your business against financial risks.Here is an example of a good idea can be seen in the Canadian dollar.
We had a long downward trend.At this point, hedgers were overbought COT index.Almost all the time, while the trend was downward.And as soon as the trend has started to grow up, respectively, the COT index for hedgers began to creep down.They go against the trend in their own interests.And start to go against the trend often advance.
In our example, the pound can see what is happening growth hedgers positions.This means that you need to expect the movement of the pound down.As for the large traders or speculators, as a rule, they go along with the market.Since a large part of its make up.
How does all this analysis?
It is worth paying attention to the whole situation.That is, pay attention to the hedgers and large speculators.And also on the small speculators.First of all, I want to warn you that the use of the COT index as a separate system - wrong.Because if we start only on the report of the COT, then you are unlikely to be able to trade profitably based solely on this information.Sometimes the signals are false, and you'll have to trade on the weekly charts.To recognize this requires a very remarkable training and experience.Plus more time factor.You will have a very long time to hold the position and use in large areas of the foot.
So I advise you to use the COT reports, as a filter to your system.That is the situation looking at technical analysis, and check the transaction and general market conditions on the report of the COT.So, we need to use all the information.Not just some separate group of traders.And also pay attention to the public interest.That is as far as the market warmed up.Let's add a panel open interest on the graph.
To do this, click: 2nd S.O.T.Panel, Sustom, Open Interest.
recall that OpenInterest- this amount of money in the market.Let's look at our example, that we have going on in the market.I draw your attention to the point where open interest is in critical positions.That is, or it is very low, or high.
How high and how low we can identify just by looking at the chart as a whole.At these points, we pay attention to what they do other groups of speculators.Namely large hedgers and small.
Let's start from the beginning.
Open interest for the pound was very low.Hedgers especially in the purchase did not climb.The positions of the major players in the main bullish and are above the level of 80. That is in the overbought zone.And, as the market has not warmed up, it means that large traders are purchased.But it is the potential for more shopping is huge.Small speculators are also buying.Therefore, since money in the market is small, and prevail purchase, we may well conclude that the favorable situation to enter long positions.
And as we can see further up market.Next to the extreme point of open interest, where it has been extremely high.
critically high open interest means that the market is overheated.hedgers position down.The positions of the large and small traders in the shopping peak.What could happen here?Small speculators can easily take a knife.Large speculators are likely to take profits by selling their positions small speculators who buy them willingly.Money too much potential for growth currently exhausted.
And, as we can see in the screenshot above, there was a drop in the next week.Since we do not know what it is - profit, or spread, to do any long forecasts (in this case for sale) makes no sense.The next point that we see in the graph open interest - 17 December.
Open interest at this point, though not reached such low levels as previously, but also very low.Large speculators continue to buy.A hedgers do not interfere with this process.There is a potential for large speculators re-entered the market and continued to buy foreign currency.What happened in the next week:
Next comes the minor fluctuations in open interest.One more point in open interest can be seen below:
While speculators and large continued to buy and it would seem that they have record profits, but:
- Firstly, the position of large speculators have not yet reached key positions COT index.
- Secondly, the COT index for commercial traders quite a can go even lower, respectively, may cause the price increase.
What we see happened:
So, one more critical.Open positions of large speculators and small speculators are also at a maximum.At a minimum positions of hedgers.This means that we are waiting for profit of large speculators.Since open interest went even higher.What happened:
would decrease, which in consequence will continue next week.But to think for a long time in the COT index recall is not necessary.The next key point in comparison with other well were not so critical.
But we can see that there is a movement.large speculators Index was high.In principle, we are not particularly bothered index hedgers.It was practically at minimum.Knowing all of this it could be concluded that there will be profit.And as we can see, the graph went down:
Then the next point, which we see on the charts is relatively high, but not enough.Here, to make any conclusions, we can not.
Let's look again at the Canadian dollar.Here as well there are a couple of interesting examples.First, we look at the index of open interest.