Registered: Jul 2012
07-26-12 08:19 PM
Thank you for your post! It is exciting to meet other traders here, who have been using COT analysis in their trading before. It would be much appreciated if you could join this topic and share your experiences with us or just give your thoughts about some of my conclusions I have made!
I believe that COT analysis on its own is not enough. I think it can be used in two ways: one way as a signaling tool, the other way as a confirmation tool, but in both cases one should have a solid system for trading, a system that can help you enter and exit trades.
In my thread I do not wish to go in to any specific system recommendations... I would be narrowing down the usage of it (COT analysis) to one type of time frame and tactic, which could leave out other great trades on different time basis and different strategies. What I mean by this, is that there are traders out there, who might be trading on shorter time frame, for example only on forex or a trader who prefers options on metal markets and on a longer time frame (from few weeks up to a couple of months) and they will be viewing the specific “formula” from different angles.
A lot of traders out there still do not have an idea, or might not even heard about Commitments of Traders Report. My goal is to introduce them to it and teach them the basis of COT analysis. After that it is the challenge of each viewer of my thread to do his or her historical analysis and back test their system with the integrated COT report.
What I do believe is this: Using COT analysis integrated in a tested system can filter out some bad trades or it may focus one’s attention to trading opportunities that the existing system might not have found on its own.
I think of COT analysis as a “car-part” --> It is like a GPS navigation system, or the windshield etc… Like let’s say the MACD histograms or bar charts or EMA-s are wheels, door knobs etc… I would say that a car on its self cannot get from A to B with only the wheels or only the engine. But a good combination of these elements can make a good car and that will definitely get you from A to B.
May I ask you if you have used the new type of COT reports in your trading yet? I’m talking about Disaggregated, CIT and TIFF reports that CFTC publishes these days… The service I use offers these reports as well, the charts look very interesting, but I haven’t started any “deep investigation” yet… have you?
All the best,