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How to use the records of the Chicago stock exchange in Forex trading
When analyzing the global currency market many professional traders use the report COT (Commitments of Traders), which publishes the U.S. CFTC (regulatory body for the futures market). Consider what they provide and why is it so interesting for traders.
Not rare to see that price of the trading instrument goes contrary to the laws of technical and fundamental analysis. Beginners can not understand such movements, but experienced traders know that price is often driven by "Smart" money.
This means large financial institutions, banks, businesses, hedge funds and so on, in General, organizations that enter the market with huge capital. They with its capital could move the market.
The big players have analytical departments that possess insider information, not available to the ordinary trader, and many other tools for market analysis. It is not surprising that they know the optimum point and time of entry into the market. This capital that operate these organizations, called "Smart" money.
Many traders would like to know what position in a particular trading instrument is a major players. What could be easier, as they trade and all will be well. It is the report of the WTO allow us to see what position was taken by "monsters" trading.
How to read the reports of the Chicago stock exchange
SOT the report published in open access on the website of the U.S. CFTC. It should be noted that the information from the futures market, but if you make the logical conclusion, it is unlikely that large financial institutions that operate billions of dollars and have financial and analytical departments with leading analysts, will risk their capital.
On the main page, find the "Market Reports", then direct the cursor and click on the "Commitments of Traders". More on the website (bottom of page) we find the Chicago Mercantile Exchange (Chicago Mercantile exchange). Here trade futures on a variety of trading instruments such as oil, coal, currency, and so on. On the screen will indicate the report format (figure below):
• only futures (Futures Only);
• combined futures and options (Futures-and-Options-Combined);
• long or short report type.
For the analysis of the trading instrument is better to use combined (futures and options) and short report format. Then find the desired trading instrument, in this case the currency pair Euro/dollar.
♦ NON-COMMERCIAL is the largest commercial organizations, banks, speculators who buy trading tool for profit.
♦ COMMERCIAL – commercial organizations or their official representatives. They are not interested in buying/selling with the aim of making a profit, they get a shopping tool for their own needs. For example, Mercedes-Benz has sold cars in the US in dollars, but at the moment she needs the Euro (taxes, commercial transactions, and so on). The company enters Forex and sell US dollars getting euros.
♦ TOTAL field shows the sum of short and long positions of large speculators and commercial organizations.
♦ CHANGES FROM the change data since the last report.
♦ NONREPORTABLE POSITIONS – the "market crowd" or small traders.
As can be seen in the figure above, the number of long and short positions at the end of February on EUR/USD pair is about the same. This is due to the fact that in March will be the ECB meeting and the big players are waiting, whether there will be additional measures of quantitative easing in the Eurozone or not.
If you look at the illustration, the number of long positions on the Japanese yen 85.240 against 36.096 short. This is clearly reflected on the chart in MetaTrader 4 Forex. So use the information traders in the analysis of currency and stock markets.
The main shortcomings of the information from the reports of the HUNDRED
In addition to positive aspects that a trader sees, in what position are the big players, there are negative aspects. The main disadvantage is that data are published on Friday night on Kiev time, when all the trading platforms are closed, and the information in them on Tuesday of this week.
So, if the trader is trading in an intraday strategy, the information of the WTO is useless for him, since output delay of almost a week. The disadvantage is the volume of trade, which is much less than on Forex. From these reasons, the information obtained from the records of the SOT may not be fundamental to determine the trend, and should be used only as additional information.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 280
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