by Andy Waldock

Discretionary COT Signals ($75 per/mo)

The nightly worksheet offers a 30-day FREE TRIAL and covers 35 markets. We provide you with the entry signals and corresponding protective stop levels. You determine when to take profits.

The discretionary COT Signals are based on a simple three-step process designed to make money on markets that are overextended compared to their value area. The value area is determined through the purchases and sales of the commercial traders that produce or consume the given commodity.

 

1 – We only take trades in line with the commercial traders’ momentum. If commercial long hedgers are buying in to guarantee future supplies at a current price level, we’ll be buying as well. Conversely, if commodity producers’ forward selling of planned production is the dominant feature of the markets, we’ll be on the sell side.

 

2 – We use a proprietary short-term momentum filter to determine if a given market has reached overextended levels. We look for CONFLICT between short-term market momentum and the commercial traders’ market momentum. This sets the trigger.

 

3 – Once our short-term momentum indicator signals a reversal, back in line with commercial trader momentum, our trade is triggered. This creates a new position in line with the commercial traders’ momentum. The swing high or low created by the market’s short-term overextension will provide us with the protective stop point. Finally, we take profits upon the market’s return to its value area.

 
Our research has shown that by tracking the momentum of commercial hedgers' buying and selling, we are able to capture subtle nuances in commodity market behavior that help predict turning points with tradable accuracy and risk tolerances. Our method allows the markets to tell us when commercial traders are buying and selling as well as how eager they are to get their trades done at given commodity market prices.
 
Our proprietary indicators are not bound by a 0 to 100 scale. This allows us to track the actual number of contracts (total position) being traded and compare it to historical Commercial trader positions at given price levels.
 
 
 
Implementing this strategy is a three part process.
  1. Commercial momentum is determined to be positive or negative. We only trade WITH commercial momentum.

    effect of positive commercial trader momentum

  2. Find counter momentum price action.

    1. When commercial momentum is positive and a market has fallen, it starts to provide a buy setup.
      commitment of traders buy signals in the us dollar

    2. When Commercial momentum is negative and a market is rallying, it starts to provide a sell setup.
      Dollar Index Commitment of Traders Sell signals
  3. Determine a swing point. Once all of the data has been crunched, we provide a swing high or, low. We utilize the swing high or, low as a protective stop point for our own trades. This allows us to quantify the actual risk factor on any trade by multiplying the market's point value times the difference between our entry point and the swing high or, low.

See More Recent Trades!

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.