Best Way To Read COT Report

The Commitment of Traders Report is also commonly referred to as the COT. The COT details open interest for each commodity on the market specifically containing 20 or more traders. The main purpose behind this report is to effectively provide traders with a level of overall transparency in terms of open interests in various markets. This report is also used to determine the size of certain positions for different groups of traders. For this reason, The COT report is extremely beneficial to notify all traders on the best ways to continue investing. This report also provides a total number of open interest for each specific day. This is very helpful for traders because this information is critical in order to continue with investments. This type of report is released every Friday. When the reports are released on Friday, they contain data that is relevant up until Tuesday of the previous week. This type of source is extremely reliable to get insight on all the different types of trades and how this can increase or decrease over time. Many people wonder how to read COT report.

How to Read COT Report

What we can see in COT report :

But for me what is the most important two things (PLEASE REMEMBER) :

Try to see Reversals Type One – When the spread between commercial traders and large investors is big, then we should expect a market reversal.

or

Reversal Type Two – When large traders start to reverse their positions (i.e. the large investors line’s trend starts reversing), we can expect a market reversal most of the times.

But let we see that on simple image. I use freecotdata.com website to see COT report charts well designed. Look example :

So on this image we can see for example March 2017 USD dollar COT report.How to Read COT Report of USD dollar in this example ? So we see that Commercial Hedgers (speculators) are 100% and Dealers at 0%. Huge spread. And we see market reversal after that.

Forex profits with COT report

The most important thing is to understand that there are no easy forex profits with COT report. COT report we can use for only long term prediction and trader can not use this report for intraday trades, short time trades.

More about COT report

Understanding the COT report is crucial to success as a trader. Many traders starting out in the industry are unsure of how to best use the COT to assist them on a day to day basis. COT provides insight and information regarding what institutional traders are doing in the market. COT reports serve a very important role as the directly contribute to how successful a company may be. These reports enable traders to analyze the information and properly make use of it in the market. The COT report includes the long and short positions in the trading market. This is a critical aspect helping traders understand best how to maneuver the market. Not every single type of trade that is included on the report is significant.

The main report released every Friday is separated into five categories. The five categories are then broke it up into three subcategories. The first of the five is known as processors and users. Processors and users are types of trader who effectively uses future markets as the hedge to their commodity of cash. These traders consume high quantities of commodity to trade the commodity within the cash market. The next type of trader is known as a swap dealer. Swap dealers have an important role as they are responsible for swapping commodities in future markets. They also manage the hedge risk associated with those swaps. Swap dealers manage the terms often work with the opposite side of the deal for hedgers and large speculators.The next type of trader is known as a manage money trader. A managed money trader is a commodity trading advisor. Managed money traders are also known as CTA’s. These are hedge funds that hold large and complete speculated positions in the future market. The next type of trader is known as a reportable trader. Reportable traders are different from the three other types of traders. These traders have substantial positions as defined by the CFTC in a given market. The last type of trader is known as a non-reportable. Non-reportable traders are also outside of the first three categories, however they have a small position defined by the CFTC. These are the main types of traders and the positions they hold in the future market.

The next category has to deal with positions. There are three main positions for trading categories. They include long, short, spreading. A long position relates to the number of traders there are in any long market. A short position relates to the number of traders that are in a short market. A spreading position relates to the number of positions in a trader category. This is very important to know as there are many different ways to look at the trading industry. There are many different ways to analyze moves made within the trading industry and how to best move forward. There are statistical categories in addition to all the other categories. Statistical categories are unique in position size changes and prevent of open interest. Some of these category are directly affected by the amount of resources invested as well as how many traders are in a specific category. The statistical categories serve an important function for the benefit of each trader. Without these specific subcategories, there would be no way to for traders to differentiate the information. Therefore sub categories play a crucial role.

The most common type of traders include commercial traders, these types of traders represent certain companies. These types of traders also reads at present certain institutions. These types of traders use the future market to offset all types of risk. The offset of the risk is directly correlated to cash or spot market. A certain producer may produce less of a product in order to prevent wasted goods. This is an example of commercial trader commercial try to protect profit if price falls. This is a very important analytical strategy in order to benefit return Vesters. Many of the commercial traders do not receive as much attention as they should because they are overlooked. This is one aspect of the COT report. The next type of trader that is a paid attention to on the report is non-commercial traders. And non-commercial trader it is a large institutional investor these large in the two still investors are similar to hedge funds. Many people wonder how to read COT report.

These large institutional investors help entities trading in future market. These institutional investors help entities with investment and growth potential they are not usually involved in a production. As a result of their limited involvement. There is less to be concerned with. And the management of underlying commodities or assets is paid attention to in this category. The next type of trader paid attention to is a non-reporting traitor. And on reporting trader doesn’t associate with many individual traders As a result of their position in the industry. They are traders that you will see categorized against the flow versus with the flow. This is an important part to note as non-commercial traders do not hold significant place in the trading market. Non-commercial traders are useful for raw data however not beneficial for the advancement. Non-commercial taters are examine more closely than commercial traders therefore they use more types of analytical information. Non-commercial traders change are in Long and pet store positions. By changing long-term positions it tells the trailer about the trend. By looking at the trend there are new investment they can be made. A long position has declined well as your position may have increased a short position can also increase why I long for the declines. All subjects are relevant to change and likely to change depending upon the future market.

There is a DOT report for crude oil. COT reports recruit will decline in sediment. COT reports are important for market reaction. COT reports of crude oil can be shown in the diagram and graph below.

The graph shows gradual increases and gradual slopes. The graph all the social spikes as well as immediate flat lines. There are many reasons to be cautious about the risk of exposure with protective options for crude oil charts. The weekly data used is useful however needs additional insight. With additional insight there’s excellent sources of reputable information from a variety of sources. Reputable information will give a perfect example of how net position is held against traders in the European and United States market.European and United States markets can be measured three EUR and USD. Disability report is a traditional technical indicator. The traditional technical indicator analyzes price and time. The traditional indicator also applies filters to the report. This is important as it helps to better understand the entire process. There are other countries that may be involved in trades and therefore they use their own types of currency’s. When these industries use their own currency’s, there must be a conversion rate to be done among strangers.

The trade is complete with a report graph. Report graphs are unique as they directly correlate to the amount of time needed in order for a traitor to make a certain trait. Want to try to make the trade within a certain timeframe the aspects of the chair analyze to the system. The system and the industry will generate whether or not the trade become successful and whether or not the trade will last long term. If that tree does indeed last long-term there are many ways to help ensure that it advances quickly in the system. Some of the best ways is hard to manage the spikes and lows within the system charts. Traders within that short or seen on the red line of graphs charts while traders with the long have been. The most effective ways to assume that the underlying trend is another flip that could occur at any time.

This will help build the buyers for relatively simple trade markets and continue to create a theme of effectiveness many different trade market experiences and therefore able to better assist. One of the best ways it is to ensure that every situation occurs within a time frame that is specified. The trend is recorded on graphs and graphs are one of the most important analytical factors for traders want to grab his analyze properly there is no need. When the trend is effectively manage there is less risk of the associated this is very important as it helps every single trying to understand the analytical information probably use in the market the best way. The best way for the CO T is to read the report and is crucial to access as a traitor. And they’re a very important roles as directly contributed successful company could be. These reports are specific to enable.

Therefore, reading COT reports is not difficult and can be done easily. The best way to read COT reports is to access them the right way. There are a few main ways to access COT reports. Some of the main ways include IMA and CFTC. The IMA provides access to the COT reports directly from insider market advisory. Insider market advisory is also known as IMA. The IMA subscription page works directly with the COT report. Insider market advisory, also known as IMA, is the premier trade advisory service. This trade advisory service provides morning and afternoon snapshots. The information they give is relevant for all eight markets in the sector and can be easily joined. Regardless of trade category, all traders have one thing in common. They share the ability to invest in the market and access potential risk or loss. This is very important to note as it contributes to the overall success of the industry. As stated previously, traders can be processors, users, swap dealers, reportable or non-reportable. Therefore the types of traders can vary in one specific market.

The best site for COT report for me is Free COT data. (images in this articles are from this website).

The second way to access COT reports is through CFTC. CFTC has a website that has the newest and latest COT reports available every Friday. In order to locate the reports, users have to go to the site and select a COT. Finding the COT reports on either website is easy and effortless. This offers a full range of benefits such as market sectors, exchanges, past reports as well as insight on position sizes. There are countless resources and benefits from analyzing and using COT reports. These reports can be used and applied every day in business and require little to no effort to find. The best way for traders to look for reports is to use the most effective method. If traders are looking to learn more about all the benefits of COT reports and the best ways to use them, they can network and build a group of individuals that are ready and eager to commit to resource trading. Therefore reading COT reports significantly benefits traders in understanding exactly where their best investments will be. COT reports provide benefit for every trader in the industry regardless of size or purpose. These trade instructions are unique and can be applied to many different markets for a successful outcome.

Of course COT report is not very reliable tool and we can not use it alone and decide investment based on COT report only. This report we need to use only in combination with other indicators.

Understanding Stop and Limit Orders Strategy to Minimize Risk

The University of California has found out in 2010 that before 24 months, the new short- term marketers in the market (almost 80%) quit their businesses. It is estimated by the common agreement that 95% of the marketers choose an early exit from the market, the fact is that it doesn’t matter which one of the above stats is genuine because it is visible that the probability stacked is in opposition to the marketer.

Risk management is commonly an unnoticed factor which might be one of the most factors that can help in conquering these apparently unconquerable odds. In order to strengthen the survival in the business, risk management should be considered as an important factor.

Being clear about the strategy about entering and exiting the market can be beneficial to make the risk management method work.

Order Types

If you are giving your full attention and focus to the market then it can bring great opportunities as well as challenges. A good strategy to enter and exit with full effectiveness is really mandatory if one wants to sustain and build in the constantly changing business.

The good news is that there are many tools available that can increase the trading effectiveness to help the trader. The main motive of any business should not be compromised and to make sure of this, the unique order types is very helpful.

Market orders- If someone wants a quick entry in the market then market order makes it easy and possible. The market orders can be executed very quickly at the market after it is placed at the exchange.

Limit orders- If you want to buy some product and sell it at a higher price, then the limit order is very helpful. One thing which is really important if you are placing orders by yourself in a trading DOM, then one thing you have to keep in your mind that if it is a buy then the price must be below the market price and if it is a sell, then the price must be above.

Stop orders- The main purpose of a stop order is to make sure that a trade’s exit upon a particular price is hit. It is also known as “stop-loss”. It is always placed at a definite price. When the stop order is hit then the market order is begin which helps in the closing of the trade.

As for investing and trading, one thing that is for sure is you cannot rule out a risk. The only thing you can do it is you can bring down the risk to the minimum possible. This will help you get an earning on your investment, howsoever small it may be. For this, you need to go by a strategy or multiple strategies. However, the reality is that the strategies might look sound, yet they bring their concern on the wake. We’ll discuss here the diverse aspects of the stop limit order strategy.

What is a stop-limit order?

If you buy the services of a broker or a brokerage agency, they will show the various options available when you plan to sell your shares in the market. Of the options, a few may be amply simple – it’s easy to for you to grasp them. However, there are some you cannot. One of such hard notion is ‘stop-limit order’. A stop-limit order is a bundle of two other sorts of market orders. What is the difference between these two options – what makes hem distinct from each other? Why do traders apply it?

Let’s understand stop-limit order better

As the name indicates a stop-limit order is a bundle of instances to stop and reduce the orders. An order in this context refers to the buying selling only when they come to a certain threshold. In other words, they are a set of two prices associated with a stop-limit order.

Buy stop-limit order

Take an example of shares priced at $25. And, you hope they may rise today. Once you buy the share at $30 you impose a stop. When the price of the share reaches $30, your order is executed and becomes a market order.

You can also put a cap on the price as a stop-limit order. In case the limit price is at $32, it’s the highest amount you can pay for one share. If the price of the share becomes $30 and an order is to be processed before the price becomes more than 32, your order is made. If the price does not reach that level the order is not placed.

Sell stop-limit order

Thy way a sell stop-limit order works is similar. Let’s suppose an investor owns the $30 stock. However, they visualize fall in its price. If you fix the stop price at $28, when the price comes to that level, your order starts working, If you fix the limit at $26, so that there is the minimum price you are ready to sell the share at.

If no sale is executed before the price declines below 26, your order is not executed. In such a case you should hope the share price to return to $26 or higher so you could sell the share to gain.

Implementing stop and limit orders – Stop Limit Order Strategy in simple example

Here are some examples that will help you to know how you can use stop and limit orders by which you can do the trade with ease and without any confusion.

1-A person wants to start a business in some products. He is purchasing at suppose 30 dollars. He is expecting a 20% profit at risk of 20%.

2- The market price is 30.25 dollars

3- He will buy a limit commodity at 30 dollars on the trading DOM

4- In 29.75$ a sell stop order is placed. If the price doesn’t go well with the entry, then the stop order will become even.

5- The price goes back 30 dollars

6- He will sell limit order at 30.25 dollars

7- If everything goes well then he will get he30.25 conversion rate and a 250$ profit will be made.

Stop Limit Order Strategy in forex trading

Here are one of my very often cases when I use stop limit order strategy :

Step 1: Find important levels – weekly and monthly low and high, Fib. levels, strong price important level.
Step 2: Set pending limit sell order when price hit resistance level or set pending limit buy order when price hit support level.

Example :
Let we watch EURUSD pair in September 2019.
We found on chart red resistance and blue support. We set lines on chart like this :

Now we want to buy EURUSD. We set pending BUY limit order when price touch blue support line. We wait to execute. In one moment price will hit support level :

After that we try to hit target as previous resistance.

Stop-limit order and stop-loss order compared

What is the difference between a stop-loss order and stop-limit order? A stop-loss order is another way of defining a stop order involving selling shares. If you’re planning to sell shares, estimate the price at which to start an order. In the early example of $30 share, the price falls to $28. In stop-loss order, there is no limit price as it is the case in stop-limit order. The market order is executed once triggered.

If you sell shares of a company whose shares are sold a lot, you may not experience much difference because an order takes time to be executed by the time the limit price is achieved. In case a stock is not traded well or is a volatile one, applying a stop-loss strategy may make you sell your share at a lower price than you were planning to.

When should I apply a stop-limit order?

As you execute, you’d like to influence the outcome of a transaction to the maximum possible extent. It’s exactly this factor that causes you to apply stop-limit order instead of a stop order, also known as a stop-loss order. When you apply a stop-limit order, you place an order to limit stock buying. Along with this, you also limit the highest amount of money you wish to spend for the purpose. In case of selling, you can put a limit on the sale of shares and thus, can reduce the losses that you otherwise have to incur when the situation goes beyond control.

The control is helpful as mentioned before when there it’s the case of highly volatile stock. A buy-stop order is executed when the stock reaches the price. But if the change is happening faster with no limit price, you will have to pay more than expected at the beginning. When you sell a volatile stock without a limit price, it means that you’re likely to sell it much lower than you did at the beginning.

Traders can estimate when to stop stop-limit order. You can execute the orders only during standard market hours. When placing the order, you can choose it for the current period or you like to extend it to a later market period. If your option is the extended market period, the order is in force until it’s executed. If your option is only for the designated day, and if the order is not in place it expires.

Risks in stop-limit order

Stop-limit order not executed

The biggest risk in a stop-limit order is that non-execution. This is important when selling. The order may expire before execution. Or, the stock may drop below the limit price you expected. Thus, you’re in a downturn spiral. You can wait and expect the price rise to the limit price. However, if the order no longer works (expires) or is canceled you may have to apply a general market order stop order selling at a price much less than the expected price.

Risk of an order partially executed

The other thing that makes your concern regarding stop-limit order is the chance of an order partly executed. If you’re planning to sell 300 shares, and the price falls below the limit price when only 200 shares sold, 100 are not executed. This is a commonplace risk involved in stop-limit orders. You should be aware of the probability of the decline before placing the order. You are likely to execute a stop-loss order if you visualize that your order may not be executed.

The risks just mention may make traders lose nerves and make them reluctant to make stop-limit orders. Rightly so.

Everything has its own advantages and disadvantages. So here are some advantages of using stop and limit order.

By using limit order one can easily predict the risk. Any mistake can lead to a loss, so never use a market order to enter the market when price moves towards the entry.
It also improves risk management. You can locate the profit targets and stop losses with full certainty with the help of involved risk and profit.

Drawbacks of a limit and stop strategy

It does not make sure that the limit order is filled. It is important to know all the details of the market and you have to do it with both the trade entry and profit target.

There is also a possibility of missing a trade. If this happens then the price only rises to 50.01 dollars and chances of no profit also arises.

Starting the limit and stop orders

If you want to grow and make a profit in the market then it is really important for you to work with passion, dedication, and full focus. You should always be learning new methods and strategies about the marketplace and most importantly a never give up attitude and a competitive spirit is the first that you will need.
A stop-limit order is the best option when you have visualized a definite highest time for buying or minimum for selling. They are not the orders you can rely on frequently. However, you could frame a stop limit order strategy to execute it carefully.