Commitment of Traders Data Analysis- Data Meets the Chart - continued

[Zack Zarr 5]

Commitment of Traders Data Analysis- Data Meets the Chart 2

 

The previous post covered my methodology of placing the COT Legacy data right underneath the charts as guiding tools for deciphering the big players’ actions. In this post, I will show similar methods using the new format of reports including the TFF (for currencies) and Disaggregated (for commodities).

 

The parameters for each window are similar to what I intruded in my previous post. These include the Long% and Short% exposure (window right below the chart) and the RelLongExposure% (second below the chart) and RelShortExposure% (the bottom window).

 

The figure below shows, the TFF format includes two major groups of traders on the buy side which are asset managers and leveraged funds. Here I picked the color blue (for asset managers) and red (leveraged funds) beside the black (for the dealer on the sell side).

 

 

The values calculated in the excel template match those shown in the top window below the chart for the Long% and Short%. One thing that I always have to look for is who is in control. That depends on the sizing of each group’s position. Although they are both large traders and have noticeable position sizes, one group is sometimes larger than the other. The table always is useful to remind me of the position size difference.

 

The data refers to Sept. 15, 2017 for the daily chart of the USDCAD. In the previous post, we saw the decreasing in the LargeSpecs or Non-Commercial short positions (profit taking) was the main action during the past few weeks. In the current chart, we see how the two different group of traders are taking profit off their shorts. Up to the first low point in the price near 1.25, both groups were adding to their shorts and the price kept dropping. The first group to start the profit taking was the leveraged funds. The asset managers waited for another dip in the price to make their decision for taking profit from their shorts. Similar situation occurred for their longs during this period. Asset managers were the latter group to decide to add to their longs.

 

This type of information is crucial when combining the supply and demand with the data analysis of the COT data. By now, I hope I have been able to provide a picture of how my weekly analysis routine looks like. In the coming posts, I will share some of my previous and current trades taken based on the similar analysis I presented in the past few posts. Understanding the concepts explained in this post, and previous posts are essential in better identifying the rationale behind my trades. I am very excited to share with you some of the trade ideas I come up with after each week’s report.

 

If you need further information or want to clarify something, please do not hesitate to drop me a message at [email protected]

 

Zack