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I think I just wrote a book. PF, RR, WR, etc.Intro, you can skip this part but I think it would be interesting for you to take a quick look: Statistics estimates and formulas? Trading is mostly about emotions, not statistics estimates and formulas. Most people do not need all of those formulas, they don't need to make plenty of stats and estimates, but just focus on discipline and emotion control. I got this quote: "The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading." I agree. Analysis of broker data has shown over and over that over a couple of years 90% or more clients lost money, and often all of their money. So no point doing stats & formulas for 90% of people that will lose anyway. What they need most is discipline, to not lose all of their money, but rather just some of their money, and emotional control, to not blow their brains out once they lose everything. I can make a few quotes too: Checking a thing quickly... Stanley Druckenmiller was 46 when he did something stupid with the dot com bubble. George Soros started at 29 and his biggest (known) mistake was Stanley Druckenmiller. Oh this one is interesting.... Alot of profitable ones that got really confident after a few years of winning and got wiped out or made huge losses or missed on much returns (Buffet says BRK cost him 200 billion, he'd be way above Jeff Besos). I see alot of late 20s to early 30s. But even older than this after decades, it's never safe, never let your guard down. But most typical is the ~30 yo guy that made lots of money for years and laughs hysterically at noobs (retail traders mostly) and was warned of dangers by people trying to scare them away but proved every one wrong, knew he was at the top, one of the best in the world, so got really arrogant, dropped his guard down, and then boom. By the way, totally unrelated, should I all in short USO? It's losing money over time and already so many idiots "invested" in it. There can't possibly be more morons that would buy this dead crap right? Lmao USO investors, what a bunch of brainlets. I refuse to lose against idiots just by being outnumbered. All in no SL. 😁 How do I start a show so I can do literal pump and dumps legally like Joseph Granville? Good. Now that we got this out of the way. 1- Winrate Pretty simple here. All this shows is what percentage of bets are winners. Doesn't really account for breakeven, doesn't differentiate between small wins big wins. Pretty useless on its own. Implicitly means that every win and loss have the same size, like putting rigid entry target SL, and never touching it. 2- Reward/Risk How big is the average or expected win, compared to the typical loss. How much are you willing to risk and how much do you expect to make? Most "educators" repeat how important the risk to reward ratio is, and it kinda is, because it is one of the best predictor of success. FXCM published some data where they show that over the 3/1/2014 to 3/31/2015 period (1 year), 53% of their clients with a RR of 1 or more were in the green, while only 17% of those without were. 47% of RR >= 1 lose money. 83% of RR < 1 lose more. Their typical win % over a quarter is 25%, and the typical global win % over a year is around 20%. I would be willing to bet that profitability goes up significantly with reward to risk. Some of it would of course be simply because people that end up with a huge win on their hands balloon the high RR stats. That said, I doubt just flipping a coin, just randomly buying with a tight stop and a far away target would work. Althought... The top myfxbook systems are almost all automated garbage systems with an average win 0.20 times the average loss, that were really lucky over a long period (3 std dev of a normal statistical distribution = 0.3% 3/1000, just pick any trash system with high WR and run a binomial probability calculator find the odds of it making profit over 100 rolls). Hey I'll do this later in this idea. And as I was saying, perfect transition, flipping a coin isn't a viable strategy, the reward to risk alone doesn't say it all, even if traders using a high reward to risk ratio greatly outperform those that don't. If you make 10 times what you lose, but you lose 99% of the time, emm how to say... And this is why we must look at the profit factor. 3- The profit factor. Oh yes Pf = (W*R)/(1-W) I have seen reports with a gross PF of almost 3, and net of barely 1.1. If you design a strategy you count spreads in it... It's obvious. Day trading sucks and every analysis of day traders data shows about 1% or less make money, and don't make much. Probably the only ones making anything are level 2 scalpers, and 'experts' selling day trading robots, or signals, or courses. First a disclaimer! The argument of day trading having terrible profit factors applies to 95% of the time. When the average move per unit of time goes way way up (spreads & commissions usually don't especially if volume goes up too), and you get in 5 hours what you usually get in 2 weeks, then obviously it's different. I focus my argument on 95% of the time, when volatility is "normal" (within 2 st dev basically, and in particular within 1 - ~70% of the time) And I have been really nice here. Getting an idea of what good profit factors are... If I participated I would take a single bet with huge leverage and hope to get lucky, easy win once every couple of events, but I doubt they allow this. Lol on the worldcupchampionship site (ran by the CME I think), there are categories, Futures traders at the top have massive returns, way above Forex. Previous year winners with futures have bigger returns than FX, but this year is just stupid. maybe they blow up soon. Top 5 FX participants as of May 14 have 40% to 97% returns. Top 5 with futures are already at 200-800%! In 2018 futures winner made 250% FX winner made 200%, sometimes futures traders make huge gains. The gap is already so big lol. Anything to do with NatGas & Oil? 😆 www.worldcupchampionships.com Looking at a "war of traders" results. 27 days... Not sure what their leaderboard is. Looks like a great way to get suckers to deposit money and pay fees asap. First place has a PF of 44%, I assume this means 1.44, second place 160% I assume it means 2.6. Followed by 1.3, 1.05, 1.13, 1.26, 6.85, 1.11.... Prob easier to get a higher PF with commodity futures where they are so much hedgers, much fewer care about hedging FX risk, plus central banks use it to manipulate everything, more people trying to make money. Sometimes the sharpe ratio is mentionned. Quick definition: The Sharpe ratio measures the performance of an investment compared to a risk-free asset, after adjusting for its risk. It is defined as the difference between the returns of the investment and the risk-free return, divided by the standard deviation of the investment. I looked at some hedge funds reports a while ago, since they diversify and hedge alot PF isn't as high. Warren Buffet has a PF of what? 100? He makes one trade every 10 years. It's basically impossible to find those numbers, unless you work at a brokerage, and apart from your own, with the exception of the few times a broker releases some data. You have to take into account how many opportunities you get also, and more but alot if implicit. I would say that a PF too low is bad, because when conditions change you will take long to notice with certainty and you will also lose way faster! If you had a PF of 1.1 you spent 5 years to grow, and that can be lost very fast AND it takes you longer to realize it is not working anyway. A high PF has a high margin for error, profits grow fast enough so drawdowns don't eliminate years of progress, and going from 2.5 to 0.75 over a period kinda is extreme. I think typically for operations that target 1 to 5 daily ATR, (days to weeks holding period), and you get more than something like 1 single bet a year, good profit factors are in the 1.5-2.5 range. Lower than this gets a little dangerous, more than this is the holy grail. A 25% winrate 5R system has a PF of 1.67. 4- Max Drawdown & risk per operation & max risk Here you use a binomial probability calculator. Plenty on the internet. Winrate 25%, Reward/Risk 5, PF 1.67 ==> After 60 bets, on average you should get 15 wins 45 losses. The odds of getting more than 15 wins (P: 16 or more out of 60) are 43%. The odds of getting less than 5 wins (55 or more losses) are 0,0956%. 1/1000. 10k account. Flat $100 risk per bet. 55 loss 5 wins = $5500 in loss, $2500 in wins, down $3000. 60 loss 0 wins = $6000 in loss, $ZERO in wins, down $6000 (rekt.) So every 1000 trades you should expect something like this right? Even with a very decently profitable strategy it will happen. You have to decide at what point you consider the odds of it just being bad luck to be too high, and you just want to drop it. Smaller drawdowns are going to happen absolutely all the time. If you are risking 1% every time and adjusting, 55L 5W would be a 27% rekt, and 60L would be a 46% rekt. The odds of losing 18 or more out of 20 are greater than 9% (9/100). Will happen ALL THE TIME. With 1% risk, drawdown of 8 to 18%. Expect it very often. Some clients use funds to diversify, to get returns with low risk. Some expect less risk and volatility than the stock market, but expect better returns. Cute. 5- Expected returns after 100 bets Say you got a system like the one I used in my example (that you backtested + used over a great number, or just used over a greater number of operations). Winrate 25%, Reward/Risk 5, PF 1.67 If you do not care about eating 20% punches in the face, and risk 1% per trade, on AVERAGE, after 100 gambles, then your results will be as such: 75 Losses, 25 wins (0.99^75)*(1.05^25) = 1.6. Up 60%. If you risk 1% of your 20 years life saving, you would get 20% drawdowns on a regular basis, meaning you worked for free 4 years. You can play around with calculators and notepad to estimate how big drawdowns you'll get, how often etc. With a 2% risk: (0.98^75)*(1.1^25) = 2.38. Up 138%. And regular drawdowns not of 8-18% but 23.3%-33.3%. And once in a while drawdowns of 60% to 70%. And a few times in a lifetime of 80% to .... What is the max drawdown before divorce + jump off a cliff? 6- Expected returns after 1 year And here we are... Traders should have a vague idea to start with but mostly look at all of this after running a strategy correctly and with some profits, over a "significant" amount of time, kek can't give a number. First of all what is the amplitude of moves you manage to catch? So the first limit is obviously the number of waves / moves. No matter what sytem you have you will not be able to join more waves than they are waves in the first place! And then... how many you can catch, is much, MUCH, lower than how many there are. Duh! Anyone with half a brain should be able to understand all of this at some point... Someone that manages to be profitable and doesn't blow up should make 5 to 40% I guess. That's that. It's exponentially harder, but also exponentially more profitable. I think I should build a new income stream writting books...
Education
by MrRenev
10
Spotting signals without staring at charts all day? [Advanced]Prologue & disclaimer, you can skip this: [ I am not talking about a strategy. I call this advanced because someone that has only been around for 3 months should be busy touching and looking at everything, soaking up info, someone around for 6 months should be busy backtesting and coming up with a decent method or strategy supported by a sufficient knowledge base. What the focus is here is how to generate ideas without wasting time. You're profitable or hoping to be, you've got a few years doing this, you're going to keep doing it for the next 30 years, you're not going to be staring at charts all day long just to spot something. Profitable strategies are complex, I seriously doubt something any idiot picked off the street can do will make money in the long run. An essential part of the strategy is knowing where to look. I guess most pro traders don't even do this step since they are hired to be experts at 1 thing and 1 thing only. "Looking for an Oil trader in the London region". I've heard of offers for FX & something, but those are portfolio managers, or managers for traders. I don't know how many people this applies to. What do equity traders do? Read the news, keep their ears open, and focus on companies they heard about? Day trading is still stupid. I thought I had a huge amount with 35 (4 commodities + ~10 currencies total of 31 pairs), and here investopedia is talking about building a primary database that contains between 300 and 500 stocks and a secondary list that fits on their trading screens. Haha ye sure ok. Scram. A site interviews a stocktwits troll "My stock selection preparation is done more on a weekly basis. 90% of my watch-list is created on the weekend, for the week ahead. At any given time I have 50–100 stocks I’m eyeing daily for potential setups.". The fact that 90% get rekt within months and quit, 9% barely make it and don't really know what they are doing, and 1% are complete autists and paranoid about losing their edge, makes finding that kind of info pretty hard. My watchlist barely changes, I always have 35 symbols in it. You want it big enough that you filter filter filter and go for the juiciest setups only, but hundreds LOL!!! netpicks "I day trade a watchlist of 10-25 names I spend 5-10 minutes 3 times a day scanning the whole list". Hedge funds hold hundreds of stocks currencies etc. What is this? It's like I am an OTP with a massive watchlist of 35. One Trick Poneys are always absolute beasts. Especially when they one trick complex high risk high reward things that others struggle with. And it gets worse the more abstract it is. I like it. I like it very much 😊 End of Prologue ] This is a marathon not a sprint. Have you ever been carrying a backpack or grocery bags and thought "hey this is quite light" and rushed forward only to get tired and have a hard time after 20 minutes, losing breath, losing your grip, and running out of energy? What about these trolls that sprint in actual marathons and lead the race... for about 50 seconds...? Then finish in 4-5 hours (Eliud Kipchoge holds the world record with 2:01:39 man grandpa broke the record at 34 years old, and he set the london record at 35, it's never too late max heart rate goes down with age but that's all, plenty of top marathon runners and bodybuilders are like almost 40, and those are physical activities, so imagine for mental activities that rely on experience and rational thinking NOT impulses, but excuse finders will always find excuses "I am too young too young to invest yet, and I have all the time in the world, and should focus on studies" followed by "I am too old now"). Absolute 😂😂😂 Short bursts are so much easier. Quick explosion and then you're done. Sweat alot and out of breath for a while, but done. Marathons are painful! Feels easy at the start but it gets difficult over time. That's enough explaining. What you want is to make it as simple and as easy as possible because your short burst motivation won't last. Myself, I want to have a focus that is small enough to stay performant and not exhaust myself, but I don't want it to be so small I miss out a ton. I'm going to go throught my thought process and come up with something at the end of this idea: I have a large watchlist... Would I miss alot? Solution 1: I keep my 35 charts and quickly look at them visually to get ideas, to get a quick "feel" of where the price is compared to where I want it to go. Solution 2: I go for 12-15 charts and spend more time on each thinking of all the possibilities and looking for more. You absolutely have to make it as simple as possible. I could remove some pairs. USDTRY I don't really ever touch. I don't remember ever doing anything with AUDCHF. But even if I reduced it I would want to keep 25 to 30 tickers in there. I can't be constantly scanning it. I don't look at indices much anymore, but still a bit, sorta need too I guess, and it's interesting. Looking at US indices and Bitcoin and Tesla breaks the routine, it makes it interesting, so that's part of the solution not the problem. I don't want to drastically reduce my watchlist, and I don't want to spend 2 hours a day looking at chart in a repetitive way. "2 hours work a day isn't much". Doesn't work like this. First of all it is repetitive and extremely boring. Check. Mate. Let's say I am looking for price reaction around support levels after an ABC. The strategy is advanced but I can divide it in steps: There's pretty much all I can think of here, not sure what else one would look at, maybe I missed something. When I have a potential setup I know how to analyse it, but the problem is in what order, more importantly how to get an idea? I can't spend 20 hours a day 7 days a week analysing every currency in depth. What is the simplest? 1- Draw supports on 35 charts once a week, set price alerts and go in more depth when an alert pops? 2- Look for reactions and then check it? 3- Do an analysis on 35 charts then set price alerts on the few levels I am interested in? 4- Look at the central bank calendar, and only pay attention to currencies moving (there's periods with certain currencies offering lots of trades and other ones doing nothing, no point looking at the ones not doing anything special or predicatable) It takes time but it is less boring than other ways. Imperfect. 5- This looks like the more viable direction, so let's dig into it more... ==> So then the question is, how often do I watch, and what alerts do I use? Better look at another now. Other examples of "dirty" ABC: And another question? How to know what the macro trend is etc? Can read news often but most Forex "news" is, going to use the correct word for it, retarded. And boring too. Absolute load of rubbish. Just read central bank announcements? I have yet to find an interesting media. Tried to post ideas myself but it's too much. I don't know if this is clear but it doesn't matter anyway. Just wanted to show the thought process. I did plenty of backtesting (I just posted a couple of charts here but I did hundreds more, not counting those I traded and those I backtested without this particular problem in mind in other words my experience). Basically I think the optimal lazy/reward ratio is with scanning my watchlist twice a week. More is greedy and I just won't do it (and end up missing out more), less is starting to be a little too little and I might miss out really often. You're not here to go and chase every little move. But you do want to grab some! At some point maybe we're all supposed to tire of it all anyway and go long term hold, or hire people. Going to fry my brain with too much thinking. So anyway I think I came up with this: This would make a decent template. Then all you have to do is fill the box with your method, system, strategi(es), preferences. What I need to keep in mind out of this: Step 1: Have clean charts with fib drawn (make a copy before vomitting all over it - I know I won't do it but I like to pretend) Step 2: Sunday & Wed: When it's not Bitcoin tier and actually resembles something ⚠️, spot the area of interest (10 sec top chrono 🚨). Price alert early into. Step 3: When I get an alert, that is a price alert ===> Then I go full TA. I have time. And it will take time. 90% filth ignored, rest gets a "reaction alert". Step 4: When I get an alert, that is a reaction alert ===> Verify, and well I know what to do w/e. Very few to keep an eye on at this point. If I spend too much time looking for an area to buy in then it's trash. The quicker I see it, the higher quality it is. If I can't do this correctly, a solution is to rent an office. Easier to do pointless boring stuff regularly with an office. Just need to go twice a week. But I really like this process. The NAZI lockdown makes it harder tbh, but with a semi normal life, following a process this simple is not a problem. I don't even see how I can make it smoother and simpler I think I reached the limit. That's all folks. Make it as simple and clean as possible. Good luck. The best system in the world is the one you stick to.
Education
by MrRenev
12
BEST Quandl Bitcoin Blockchain Health DashboardHello, my Best traders, Did you do you can build your own BEST Bitcoin blockchain dashboard on TradingView? (I certainly didn't until yesterday) What is Quandl? Quandl (quandl.com) is the premier source for financial, economic, and alternative datasets, serving investment professionals. Quandl’s platform is used by over 400,000 people, including analysts from the world’s top hedge funds, asset managers and investment banks How can you access this dataset via TradingView? - With the instrument/asset search - With the pinescript Quandl function (introduced in April 2020 via a TradingView blog post: www.tradingview.com) For quandl.com you'll need to create a FREE account to access their datasets. To find the ticker IDs (ex: QUANDL:BCHAIN:HRATE), you can only find them on quandl.com for now How can you access this dataset via TradingView? For me, this has nothing to do with technical analysis here. It's more about fundamental (or blockchain health) analysis This dashboard is a proof of concept - that we can include on TradingView a lot of Bitcoin blockchain metrics such as: - USD Exchange Trade Volume - Hash rate - Bitcoin mining difficulty - Miners revenue - Cost per Bitcoin Transaction - Number of unique addresses used - Full list of available Blockchain metrics here Split screen To get this view, I only split my screen in 6 TradingView tutorial for doing so here Best regards Daveatt
HEducation
by Daveatt
4
How to Chart Futures Contracts and Crude Oil's Historic MoveCrude oil traded at -$40 per barrel and that is a historic move. It will go down in the history books. In this video, we want to show everyone how to track and analyze futures on TradingView, specifically future contracts in crude oil CL1! and CL2!. On TradingView, it's possible to study any futures market and break that market down by each month. CL1!, for example, shows the current crude oil contract in front. CL2! shows the next contract in front. You can also dive into specific contracts that go as far as 2021 or 2022 or beyond. This video tutorial is meant to be educational and we hope it helps anyone interested learn more about these markets. It's important to remember that most futures contracts trade based on an expiration date. Then, the contracts roll to the next month after that. As a platform, TradingView gives you the data and tools needed to analyze any of these contracts. The quickest way to getting started is to use the search bar to explore all the possible futures contracts that can be analyzed or visualized on a chart. We hope this video tutorial helps the community get started. Please press like if you enjoyed it and, even better, please leave a comment to add to this discussion. Let's hear your opinion on futures market and the recent crash in crude oil.
NYMEX:CL1!Education
by TradingView
11
Correlation between assetsWhile trading price action and patterns on the charts can alone be quite profitable. However, in this post I hope to stress the importance at looking at more than one chart and understanding the correlation between assets. There are many cases in which foreign exchange assets for example are heavily influenced by indexes and commodities. Some important examples of this includes: - Gold and CHF + JPY (when gold goes up, CHF and JPY gain strength. This means that the USD pairs will be inversely correlated and experience opposite moves (confusing i know)) - Oil and CAD - Shanghai index and oil There are many other examples out there for correlated markets and so it'In this case it can often be important to not only look at the charts of both assets but also to watch out for news in both cases. By staying on top of these correlations and watching them closely you can gain a highly valuable edge over the markets.
OANDA:XAUUSDEducation
by kuroSoraFX
2
How To Chart Economic Data Like Jobless Claims or GDPCharting economic data can help you learn more about the macro world and see the bigger picture. This chart shows weekly Initial Jobless Claims in the US. In other words, it shows you how many people are filing for unemployment each week. The big spike, which has never been seen before in economic history, shows what the COVID-19 slowdown did to the economy in just one week. It is unprecedented. You can chart Jobless Claims and much more. To get started, open a chart, go to the search box, open the dropdown menu, and then find the tab furthest to the right of the drop down called Economy. In this area, you will find many different types of economic data that you can chart from GDP to ISM and more. Most of the data comes from FRED and is US related, but please write us in the comments if you want to see other forms of data. We hope you enjoyed this quick chart and tutorial and we look forward to sharing more! Press like if you enjoyed it or please comment below to share your thoughts.
FRED:ICSAEducation
by TradingView
10
Commitment of traders reportWHAT IS IT The Commitment Of Traders (CoT) is a report issued by the Commodity Futures Trading Commission (CFTC) , one of the most important trading insitutionsof the American government. The report has the purpose of transparently showing market dynamics to the all the people involved or interested in the matter. The COT report show all currently open positions (open interest) of the future and options market, where 20 or more traders hold positions for an amount greater or equal to the minimum amount amount established by the CFTC . The report is issued every Friday at 3:30 P.M. (Eastern Standard Time, hence UTC-5). Each report normally contains data until previous Tuesday. CFTC usually receives data on Wednesday morning from the reporting firms (i.e.: Future Commission Merchants, Financial Insititutions, Brokers or International Stock Exchanges). After some verifications, CFTC publish data the following Friday. For each market, data are provided in terms of existing (still open) LONG and SHORT positions. TYPES OF REPORTS There are 4 types of report: 1) Legacy It contains data split by stock exchange. This report has two different variants: "futures only", that contains data related to the futures market only, and "combined", that contains aggregated data for futures and options market. All the reported positions in this report are split in two main market actors categories: Commercials (or Large Speculators) and Non-Commercials 2) Supplemental It includes contracts related to 13 selected agricultural market commodities. This kind of report split positions in 3 market actors categories: Commercials (or Large Speculators), Non-Commercials and Index Traders. Differently from Legacy report, the Supplemental is provided in the "combined" format only, hence contains data for both futures and options market 3) Disaggregated This report contains the same data issued in the Legacy report, but with a more detailed drill down in terms of representation. First of all, it presents data split in 5 macro-categories: Agriculture, Petroleum and Products, Natural Gas and Products, Electricity, Metals and Other. Moreover, the report shows open positions/interests of 4 market actors categories: Producer/Merchant/Processor/User, Swap Dealers, Managed Money e Other Reportables. Aggregating data of this report, it is possible to obtain same data of Legacy report, hence this is a detailed view of data contained in the Legacy report. The Disaggregated, as well as the Legacy one, is available as "futures only" and "combined" variants 4) Traders in Financial Futures (TFF) This report includes contracts related to currencies, US Treasury Bonds, Eurodollar deposits, VIX shares and Bloomberg Index only. The reports shows open interests of 4 market actors categories: Dealer/Intermediary, Asset Manager/Institutional, Leveraged Funds e Other Reportables. Last, also this report is available as "futures only" and "combined" variants REPORT FORMATS Legacy and Disaggregated reports are provided in two formats: short (synthetic) and long (extended). Both these formats contain same data, but long format contains also the concentration of open positions in the hands of the major 4 and 8 market investors at the moment of data collection, while short format does not contains any data about concentration. TFF report is available in long format only, while the Supplemental is available in the short format only. Report type Scope Format Futures Combined Long Short Legacy ✓ ✓ ✓ ✓ Disaggregated ✓ ✓ ✓ ✓ TTFF ✓ ✓ ✓ X Supplemental X ✓ X ✓ Legacy report As said above, market actors in Legacy report are divided in 2 categories: Non-Commercials , or Large Speculators : they are market speculators as well as hedge funds. This category normally uses financial leverage to amplify variation of derivative asset and has an aggressive behavior in the market. They use rigid stop loss policies and, when the market falls below certain levels, they reverse positions on the other side. The main purpose of Large Speculators is not the asset they buy or sell, but to obtain a net profit from the buy/sell cycle. They normally have a trend following behavior. Commercials buy futures just because they are interested in the underlying asset and try to hedge their financial exposition related to the commercial activity with the assets they are interested in. These market actors hold more than 50% of open positions in the US futures market and normally they go against the price trend: they sell when the market goes higher and they buy when the market goes lower. Their positions on underlying assets normally anticipate market trend, hence they should be carefully monitored Non-Reportable : are the open position of small investors/traders that normally are on the wrong side of the market. This investors category is usually confused and not disciplined. They do not follow precise rules and are usually dragged by the trend, but they are slow to reverse positions when the market trend reverses. The following example contains data about "futures only" market for BUTTER, coming from Chicago Mercantile Exchange. BUTTER (CASH SETTLED) - CHICAGO MERCANTILE EXCHANGE Code-050642 FUTURES ONLY POSITIONS AS OF 03/17/20 | ----------------------------------------------------------------------------------| NON-REPORTABLE NON-COMMERCIAL | COMMERCIAL | TOTAL | POSITIONS --------------------------------|---------------------|--------------------------|----------------- LONG | SHORT |SPREADS | LONG | SHORT | LONG | SHORT | LONG | SHORT -------------------------------------------------------------------------------- (CONTRACTS OF 20,000 POUNDS) OPEN INTEREST: 11,597 COMMITMENTS 0 2,473 453 10,401 8,149 10,854 11,075 743 522 CHANGES FROM 03/10/20 (CHANGE IN OPEN INTEREST: 753) 0 -127 101 675 796 776 770 -23 -17 PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADERS 0.0 21.3 3.9 89.7 70.3 93.6 95.5 6.4 4.5 NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS: 47) 0 12 10 28 22 38 34 It is possible to see as in the report is provided the total amount of LONG and SHORT positions for Non-Commercial, Commercial and Non-Reportable actors. Variations from previous week are moreover reported. In addiction to LONG and SHORT positions, Legacy report contains also the SPREAD amount, that is available for Non-Commercial only, and refers to contracts that are opened LONG and SHORT at the same time. Normally a growing SPREAD value means a high level of uncertainty. If we calculate NET POSITIONS (NP) for the 3 actors categories, as it's easy to check, the report show a zero-sum scenario: NP Non-Comm = 0 – 2,473 = - 2,473 NP Comm = 10,401 – 8,149 = 2,252 NP Non-Rept = 743 – 522 = 221 NP Non-Comm + NP Comm + NP Non-Rept = -2,473 + 2,252 + 221 = 0 OPEN INTEREST value is the grand total resulting as the sum of LONG, SHORT and SPREAD positions: Open Interest = 0 + 453 + 10,401 + 743 = 11,597 Supplemental report Even the Supplemental report (called also Commodity Index Traders - CIT) shows data in the same manner of Legacy report, but the market actors are 3: Non-Commercial, Commercial and Index Traders. Non-Commercial and Commercial actors are the same, while Index Traders category has appeared for the first time in January 2007. Before that date, investors that are now reported in this category were scattered in the two existing categories (Non-Commercial and mostly in the Commercial). The creation of Index Traders category has had the purpose to separate that category from Commercials, because Index Traders are not involved in the buy/sell cycle of underlying assets, and are usually managed funds, institutional investors or swap dealers. Index traders are normally interested in passive and longstanding LONG positions, while are not interested in the short-term price fluctuations. It's not unusual that this category start buying when price is falling and technical analysis says that the price falling will be even more deep. Index Traders are hence a counter-part of speculators, who have usually a contrarian habit. Supplemental report is provided for 13 commodities: • WHEAT-SRW - CHICAGO BOARD OF TRADE • WHEAT-HRW - CHICAGO BOARD OF TRADE • CORN - CHICAGO BOARD OF TRADE • SOYBEANS - CHICAGO BOARD OF TRADE • SOYBEAN OIL - CHICAGO BOARD OF TRADE • SOYBEAN MEAL - CHICAGO BOARD OF TRADE • COTTON NO. 2 - ICE FUTURES U.S. • LEAN HOGS - CHICAGO MERCANTILE EXCHANGE • LIVE CATTLE - CHICAGO MERCANTILE EXCHANGE • FEEDER CATTLE - CHICAGO MERCANTILE EXCHANGE • COCOA - ICE FUTURES U.S. • SUGAR NO. 11 - ICE FUTURES U.S. • COFFEE C - ICE FUTURES U.S. Disaggregated report Market actors of Disaggregated report are: Producer/Merchant/Processor/User : they are involved in production, handling, packaging or transport of physical assets that is underlying to the future instrument or option. These actors use futures to cover/hedge risks associated to the activities they are involved in that are strictly related to the production of the assets Swap Dealers : they are subjects that are involved in trading swap contracts related to the commodity and uses futures market to cover/hedge risks associated with swap transactions. The counterpart of a Swap dealer could be a speculative traders, as well as an hedge fund, or a more traditional Commercial subject that is interested in managing risks associated with the commerce activities of the asset Money manager : to this category belong Commodity Trading Advisor (CTA), Commodity Pool Operator (CPO) or an unregistered fund identified by the CFTC. These subjects are delegated from their clients to do financial operations in their behalf Other Reportable : all speculative traders that are not belonging in the three previous category are included in this category Even in this case, the report shows LONG, SHORT and SPREAD positions. Comparing this kind of report with Legacy, we can see that: COMMERCIAL = PRODUCER/MERCHANT/PROCESSOR/USER + SWAP DEALERS NON-COMMERCIAL = MONEY MANAGER + OTHER REPORTABLE This explains why the report is called "disaggregated". It shows the same data but with a more level of detail especially regarding the actors that hold open positions. If we take the Disaggregated report about BUTTER for the "futures only" market coming from Chicago Mercantile Exchange (equivalent to the previous example that is showed under the Legacy report section, we see: :------------------------------------------------------------------------------------------------------------------------------------------------------ : : Producer/Merchant : : : : : Processor/User : Swap Dealers : Managed Money : Other Reportables : : Long : Short : Long : Short : Spreading : Long : Short : Spreading : Long : Short : Spreading : -------------------------------------------------------------------------------------------------------------------------------------------------------- BUTTER (CASH SETTLED) - CHICAGO MERCANTILE EXCHANGE (CONTRACTS OF 20,000 POUNDS) : CFTC Code #050642 Open Interest is 11,597 : : Positions : : 8,893 6,326 1,048 1,363 460 0 301 180 0 2,172 273 : : : : Changes from: March 10, 2020 : : 244 648 324 41 107 0 -12 -8 0 -115 109 : : : : Percent of Open Interest Represented by Each Category of Trader : : 76.7 54.5 9.0 11.8 4.0 0.0 2.6 1.6 0.0 18.7 2.4 : : : : Number of Traders in Each Category Total Traders: 47 : : 24 18 . . 4 0 . . 0 10 9 : --------------------------------------------------------------------------------------------------------------------------------------------------------- If we take the categories Producer/Merchant/Processor/User and Swap Dealers and we sum all LONG positions and then subtract all SHORT positions, we obtain an overall NET positions like this: NP = (8,893 +1,048 + 0 + 0) - (6,326 + 1,363) = 2,252 Now, if we do the same calculation for Commercial category of the correspondent Legacy report (see above) we obtain: NP = 10,401 - 8,149 = 2,252 This is the confirmation that Disaggregated report contains the split of data reported in the Legacy report, where Commercial category is divided in Producer/Merchant/Processor/User and Swap Dealers. Same calculation would demonstrate that Non-Commercial category in the Legacy report is spitted here in Managed Money and Other Reportable categories. If we now consider the Disaggregated report and we sum all LONG positions and then we subtract all SHORT positions for each actors category, we obtain: (8,893 + 1,048 + 0 + 0) – (6,326 + 1,363 + 301 + 2,172) = 9941 - 10162 = -221 Given that the grand total should represent a zero-sum scenario, e can deduce from Disaggregated report that net position of Non-Reportable subjects should be +221, hence a net LONG of 221 contracts, and that is correct, in fact it is possible to obtain the same result from correspondent Legacy report (see above) by subtracting net SHORT position for Non-Reportable actors to the amount of net LONG positions for the same actors. Hence Disaggregated report allow us to calculato also net position of Non-Reportable, even if the data do not explicitly report the value. Traders in financial futures report This report is a further view on the market and split market actors in two sides (SELL and BUY) and 4 categories: SELL SIDE Dealer/Intermediary : are financial intermediaries who earn by the commissions related to the sell of financial products. Big banks and other financial entities are involved in this activities BUY SIDE Asset Manager/Institutional : they are insitutional investors, including pension funds, insurance companies and investment portfolio managers whose clients are mainly institutional entities Leveraged funds : these are typically speculative funds (hedge funds) and various types of money managers, including the Commodity Trading Advisors (CTA) and the Commodity Pool Operators (CPO) not necessarily registered by CFTC. These subjects can be involved in hedging strategies and arbitrages on their own capital, or even third parties capital Other reportable : these are all the traders that are not included in previous categories Differently from Disaggregated report, the TFF report the positions of the mentioned actors categories are not an exact disaggregation of Commercial and Non-Commercial positions reported in the Legacy report. Here each actor belonging to one of the categories mentioned above could belong to the Commercial or the Non-Commercial category in the Legacy report, basing on the decision that CFTC takes during the report creation, that can be different time after time (i.e.: a subject that has already been considered a Commercial one in the beginning, can be shifted to Non-Commercial after a while, depending on the specific activities he is involved during the time, that can change as well). The TFF report is moreover available only in the LONG format REPORT ANALYSIS If we properly analyze data in the Commitment of Traders legacy report, we can determine the expectations of each market actor category regarding the market future. The possibility to know the net positions of Commercial subjects (institutional investors) is the basis to understand the market sentiment. Their influence is, in fact, between 50% and 75% of the entire futures market of S&P500 and from 40% and 60% of Nasdaq100. It is useful to point out that Commercial subjects, as well as the Non-Commercial, can take arbitrage or hedging positions, or, alternatively, put in place an active management of their portfolios by buying or selling futures on foreign (not US) markets, or, again, have open position on the futures' underlying assets and protect themselves from risks of price variations by taking opposite positions on the futures market. Hence the Commitment of Traders Report is an important thermometer to measure US stock exchange sentiment, but it isn't a tool that, alone, can allow us to predict how financial markets will move. It should be used (as usual) together with other indicators, tools, analysis and perspectives to have a better understanding of what is happening and a good approximation of what is going to happen (most likely). Commercial subjects are active actors in the futures' underlying asset market and generally sell when the market (price) grows and buy when the price is more convenient (low), hence their activities are contrarian to the logic of speculators. For this reason the Commercial actors are often responsible of market moves and trends. They drag prices and the market with their activities, hence they anticipate and determine the market trends. Non-Commercial subjects, viceversa, have opposite interests. They want to make money by price variations, hence they buy when the market shows growing prices and sell in the opposite conditions. This behavior is what we call "trend following" approach. Here are some typical scenarios that we can find by analyzing the Commitment of Traders report: 1) If Non-Reportable actors (small/retail traders) are LONG and Commercial are SHORT, the Non-Reportable actors are most likely going to loose money because the price will go to to the side where Commercial are pushing it (down) 2) On the maximum levels of an asset price (i.e. near significant RESITANCE levels), Non-Reportable are likely pushed to SELL their positions. Then stop loss levels are likely hit and only after the price starts his falling stage 3) If Non-Commercial are LONG and Non-Reportable are SHORT, we are likely in the middle of an UPTREND and there is more space for the price to gro further 4) If Non-Commercial are LONG and also Non-Reportable are LONG, we are likely in the "euphoric" phase of the trend, hence the trend is going to finish soon 5) If Non-Commercial are SHORT, Non-Reportable are upgrading their SHORT positions and Comemrcial slow down their LONG positions, e re likely in the terminal phase of a downtrend If we accept the hypothesis that Commercial traders hold better information on the market than the others just because they are active actors of the futures' underlying assets (it's their own business!), it is very important to monitor their behaviour in order to understand how they are evaluating the situation related to the specific commodity that is at the center of our interest. Commitment of Traders Index An interesting approach to have effective insights from the Commitment of Traders report can be obtained by calculating an index using the report data. Normally Comemrcial net positions are used to calculate the index as follows: NP (Net Position) = Long Positions – Short Positions Usually, an interval of 26 periods (weeks) is selected and the calculation to determine the index value is: COT Index = * 100 The index, expressed as a pecentage value from 0 to 100, reflects net position of Commercials on the basis of last 26 periods. It can be used as an indicator of overbought and oversold zones and can be a good tool to understand where investors are moving. The index can be also calculated for Non-Commercial or Non-Reportable positions. Last, but not least, remember that Commitment Of Traders report is released every Friday evening, but contains data up until previous Tuesday, hence a "lagging" effect should be seriously considered in all the analysis that involves it. The content of this article has solely education purposes and should be not considered trading or investement advise.
Education
by Marco_it972
How To Find The Correlation Coefficient For Any Two AssetsThis chart shows Bitcoin (candlestick chart) and the Correlation Coefficient between Bitcoin and the S&P 500 (white graph). You can find the Correlation Coefficient between any two assets in seconds -- it's easy. First, head to Indicators & Strategies and then search for Correlation Coefficient. When you find it, click it, and a box will appear asking you to type in the asset you want to compare. Press Enter and the chart will calculate the correlation immediately. Correlation Coefficients are important because they can show you how two assets are moving together. For example, are they moving in lockstep or in opposite directions? A correlation of 1 means a perfect positive correlation and a correlation of -1 means a perfect negative correlation. We hope this quick guide helps you with your analysis. Please press like if you enjoyed it and write in the comments for other tips or tricks.
GEMINI:BTCUSDEducation
by TradingView
10
Lessons about ultimate ignorance, survivor bias, exp. growthHello, I wanted to write about these 3 subjects, I have alot on my mind but I'll try keeping it compact and clean. 1- Ultimate Ignorance * People are persuaded the stock market will always go up. Why? They expect to all become rich with absolutely no effort like magical money will just appear in their pockets. Even a woldwide index isn't completely safe, global markets have dropped and stagnated for more than 100 years in the past and stock markets are only 500 years old. Concerning individual countries there has never been one that lasted forever... So it's pretty irrational as Einstein would say to expect a different outcome this time. And money doesn't just magically grow on trees forever what are those people thinking... They are going to learn a harsh lesson. * Certain people are completely stupid and out of this world. I have no word. The type of person crying because Bernie is not the dem frontrunner. One of those said, and it seemed it wasn't a troll, that "rich" bloomberg was so rich he could give every single american citizen $1 million which would change the life of most americans. And when people tried explaining how stupid that claim was, that person defended it "bla bla bla the point is he could give 1 million to every one and he wouldn't notice". The kind of people that watch clown news network every day and believe what they say. Even in congress alot fail basic maths taught to 6 yos. And of course they think infinite money can be printed and make every one rich. And if need money for free stuff always simple solution "just tax the rich". All of their idiotic ideas are traumatising. And on top of that it has been tried and failed. I lost all hope for the human race... Might be living in noisy stressful big towns making people lose their minds. We need to end wageslavery and have an exodus back to rural areas asap, but this is an idea for another post. * 2 years ago Paul Singer (the Argentina Vulture Capitalist managing a few dozen billions in a fund) had this to say about Bitcoin in a letter sent to investors, unlike Warren Buffet he does not try to look nice and friendly not hurt anyone feelings and just says it how it is: “This is not just a bubble. It is not just a fraud. It is perhaps the outer limit, the ultimate expression, of the ability of humans to seize upon ether and hope to ride it to the stars... But is it not glorious that when the equivalent of nothing attracts priests and parishioners who run up the price, the very willingness of the mob to buy it at higher and higher prices is seen as validation of the thing, rather than an indication of the limitless ignorance of swaths of the human race?” I completely agree. And like this person, I just say it how it is no point sugar coating it, Warren does it and crypto victims are still hating the guy so what is the point? He admitted there was genius in Bitcoin, when he called it a "Brilliant scam". I completely agree. Crypto HAS to be the ultimate never seen before super scam, the biggest ponzi in history. They can't ever have been any scam this big. Social security and debt are different so I'd count them separately. Bitcoin is one of the biggest mass delusion the dumbest the peak of human ignorance. "The outer limit" yes, this must be it, how can it possibly get dumber? 2- Survivor bias How ignorant are you? Here is a little test, got this from a recent video on youtube about prediction: This is an image extracted from the damaged planes the air force has in their hangar (I think it was the RAF but it doesn't matter): Command wants to armor the plane. Where should they place the armor? (can't full armor the plane makes it heavy and costs money & a nation cannot print or tax itself into wealth) The red areas represent where the planes took bullets on average. Well what does this tell us? It tells us that the planes in the hangars have this composite. In other words, the planes that made it home. I know alot of people ("just tax the rich make everything free") that would instantly say "armor the red area" but it is so wrong. This is why natural selection favors the smartest, and why wars are won by smarter faster thinking commands (cough cough france germany ww2). The reason why their planes had very little impacts in the mid fuselage engines and cockpit is really obvious... Those ones did not make it home. So all they get back are the survivors... That didn't get hit in the priority areas. Understanding survivor bias is important. In this video it was a class lesson and about half the students gave the wrong answer. Of the other half I am willing to bet they were mostly just afraid to look stupid or sleeping. 3- Exponential Growth The graph is a classic. Some examples: - Bacteria Colonies: the stagnate when food rarefies then just die of hunger/eat each other - Virusses (Corona...) - Internet Virusses - Ponzi Schemes (you know one...) - Product Life Cycle (the radio was introduced - Lag Phase, grew till every one had one, stagnated at 90% adoption or so, and has been dying with tv the internet smartphones) - Bubbles ("back to normal" is stagnation) - And more What is great about maths is how you learn that everything is correlated and works the same. And add finance which also does that, your brain goes boom. By the way, in Asia the coronavirus so many nuts are so afraid of, is in the decline phase. In Europe and NA I think we are at stagnation phase but there has been a spike in case, probably from all the people testing for it. What a joke. Idiocy to the limit "outer limit". Peak ignorance. People are fighting for toilet paper. I don't even understand. Some numbers. Worldwide cases of CoronaHoax: 150,000. Probably a bit more with the infected people that don't even notice it LOL! H1N1 2009 (swine flu) cases: 700,000,000 to 1,500,000,000. Half a million deaths. There was like easilly 1 billion cases of H1N1. It is still good that government try to limit the spread of the virus, to protect their elders. But all these ignoramus panicking, and whining Trump didn't do enough (Obama did nothing for 1 billion infected H1N1...). Oh and by the way an analysis was done on 1 billion infected H1N1... It was a smaller deal than the common flu THAT HAPPENS EVERY YEAR. The pathetic little common cold known as Covid-19 (it is a common cold) is on the decline already :) Mass hysteria over this... so this is it... Clown world. The exponential spread of idiocy is at max now right? Ah right we keep helping them out rather than let natural selection do its job so the decline won't ever happen. "You have to be a contrarian to make money". Yup. When the herd panics "CO2" (makes so much sense) "CoronaPoop" (sad) or gets all excited "Bitcoin moon soon" (reptilian brains) you know it is time to consider thinking the opposite. Interesting how everyone that makes money consistantly, all the big time billionaire financeers, all think the same. 90% are going to have this mob mentality to varying degrees. SHEEP. Illogical irrational ignorant sheep. Understand how the reptilian herd behaves, profit from it, rince and repeat. No one ever made money being a sheep (ok there were a few but they got lucky). Always stay rational. This gets repeated so often via "do not be emotional", but those that repeat this number 1 tip do not always understand it and think it means you should avoid going completely berserk (clearly they don't trade and just repeat something they read), it means BE RATIONAL (as opposed to emotional). And this is the 1 exception, the 1 free meal. In this case there is a very simple way (well maybe not for everyone, but simple on paper) to make alot of money. By simply being rational you already beat 90% of the competition. It is magical.
BITSTAMP:BTCUSDEducation
by MrRenev
9
The VIX at 50 and Using Custom Trend Line TextThis chart shows the VIX since 2018. Between now and then, two significant moves have occurred. In both instances, the VIX went as high as 50 before topping out and then dropping back down. Will that happen again today? What's also cool about this chart is we're demonstrating our new Custom Text for Trend Line tool. You can now draw any line on your chart and then easily add text alongside that line. The line can go sideways, up, down or at an angle and the text will follow it. To try it for yourself, open a chart and follow these steps: 1. Open your line Settings by double-clicking on the line or right-clicking and going to Settings. 2. Check the Show Text box and then type anything you want. 3. Adjust the alignment of the text of your choice. You can read more here on the official TradingView blog: www.tradingview.com Let us know if you have any questions or want to chime in on your thoughts about the VIX today.
TVC:VIXEducation
by TradingView
3