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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
>
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