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Hi Scheier
Thanks for your email. I think that you might find the Future's Mag article
interesting because it tries to find out who is liquefying the individual
markets. ...
i.e., where are this "large chunks" of money are going to come from that you
and the Funds etc. want to take out of the market.
My interest is spreads. I have about 700-800 2 week to 2 month spreads that
I follow. So they are naturally longer term positions. Whether your interest
is options or spreads or naked contracts, I feel that you still have to do
ALL of the leg work.
One of the spread guru's talked about having different forms of analysis
going in your direction. I've always liked that idea ... that's why I've
moved away from a reliance on TA.
Best regards
Walter
PS to others that wrote:
"... instinctive recognition ..." is usually associated with "detective"
skills, i.e., spotting what's wrong with the chart or trade. More in line
with "the glass being half empty" rather than the other way around. Negative
pattern recognition is very difficult to back test. It's far easier to state
it positively and then back test that. This type of analysis is difficult if
you are used to MS's price bars stopping at the current bar (time). Studies
re what time and distance movement are required to achieve a MA cross are
far more helpful.
----- Original Message -----
From: "scheier" <scheier@xxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Wednesday, April 26, 2000 4:54 PM
Subject: Re: KW0K/KW0N
| Walter Lake wrote:
|
| > .........This simplified explanation is how I understand the COT
positions.
| > Maybe you
| > could explain some more about how to think about how to trade against
| > (contrarian maybe) hedging strategies Steve.
| >
| > Commercials are positioned for a longer time frame.
| >
|
| That's pretty much my point, Walter. That the usefulness for these
figures is
| very limited for short term trading. It's not how you analyze the COT
report to
| crack its code, but whether you consider this report at all for a trade
that is
| based on a short term bar chart pattern (using my system), or a short term
swing
| cycle extreme (using Steve's). If I needed to predict the market in
order to
| trade--something I avoid like the plague--then I'd surely want to know
what the
| commercials are doing. But from my point of view, that's the stuff of
| newsletters and analysts. Commodities are so leveraged that I can make a
| profit in two to five days in what might be a countertrend trade for you,
but is
| a tradeable short term trend for me. For this, I haven't found the
commercials
| of much use. I know Larry Williams would disagree with that, but Larry
is
| always looking for reversals to catch the big moves. I find this
hazardous and
| it chews up my account.
|
| Here I clearly don't mean to denegrate the use of commercials for longer
term
| position trading, but instead, I simply want to compare the usefulness of
the
| tool with the time frame of the trader's system. Yours is obviously
longer
| term and these considerations are probably critical. Adam's P&L, for
| instance, is almost a day trading system, short term trading at the very
least,
| and he could therefore find a whole series of trades that are profitable
but run
| counter to commercial and/or fund positioning without ever even having to
| consider them.
|
| Or maybe I've just been lucky. <g> All the best......
|
| scheier
|
| >
| > Best regards
| >
| > Walter
| >
| > PS: For others who wrote here's an end-on look at the last 30 years of
SK
| > front months. It'll give you an idea of how flat they are and cheap Vs
dear.
| > You can do the same with the spreads. Seasonalities are different. If
you
| > don't like using Demetra then you can use "P" values for the dailies.
| >
| > ----- Original Message -----
| > From: "scheier" <scheier@xxxxxxxxx>
| > To: <metastock@xxxxxxxxxxxxx>
| > Sent: Wednesday, April 26, 2000 9:55 AM
| > Subject: Re: KW0K/KW0N
| >
| > | The question I guess is whether you should ever buck the
| > | commercials in the commitment of traders report as they
| > | accumulate a position, in this case, the grains. I think you have
| > | to consider whether your system is designed to trade short term
| > | signals or you're a longer term trend follower. I don't see it very
| > | relevant for Adam's P&L techniques, and even's Steve K's
| > | oscillator signals could continue to give accurate calls for short
| > | term cycles while the commercials continue to accumulate.
| > | My experience with the commercials is that they accumulate a
| > | long position often well before the bottom has arrived, and even
| >
| > --------------------------------------------------------------------
| > Name: SxxK_FrontMonth.gif
| > SxxK_FrontMonth.gif Type: GIF Image (image/gif)
| > Encoding: base64
|
|