Thread: Another way to trade PA profitably

I began using COT way back but didn't really understand what it meant until I read Larry Willi. He's an expert in COT reports.
Anyway, combining price action with COT has been really profitable for me. These transactions generally last more, generate a lot of pips (usually I get 500 pips) and I only look at daily, weekly and monthly charts.

Basically you want to pay attention when both the advertisements and tiny speculators are in extreme and opposite positions. I exit the big speculators because generally they are trend followers. We want to get into a trend right when it begins and get out when it ends. Open interest is optional but can be employed to ascertain the strength of this trend. If the advertisements are extremely short and take 70 percent of all positions you know a major trend change is coming so watch for change price action patterns.

Allow it to be easier, COTs are used for choosing market tops/bottoms, price action for entry. I use a really wide baldness, generally 200 pips or continue swing low, occasionally I do not use stop loss whatsoever if I'm really, really certain.

This is really tough to describe in words so I'm going to set up some charts so that you guys can better understand just how this works. Make sure you check out James16's chart thread to learn the fundamentals of price action before you move.

Eventually I thank James16 because of his outstanding thread on PA and of course Larry Willi because of his enlightenment on COTs.

Pictures will be posted soon.

Originally Posted by ;

I began using COT way back but did not actually understand what it meant until I read Larry Willi. He is an expert in COT reports.
Anyway, combining price action with COT has been really profitable for me. These trades generally last longer, generate a lot of pips (usually I get 500 pips) and I only look at daily, weekly and monthly charts.

Basically you wish to listen when both the advertisements and small speculators are in extreme and opposite positions. I exit the big speculators because generally they're trend followers. We wish to get into a trend right when it begins and get out when it ends. Open interest is discretionary but could be used to determine the strength of this trend. If the advertisements are extremely short and take 70% of positions you know a major trend change is coming so watch for change price action patterns.

Make it more easy, COTs are used for choosing market tops/bottoms, price action for entrance. I use a really wide stop loss, usually 200 pips or continue swing low, sometimes I don't use stop loss at all if I'm really, really certain.

This is actually difficult to explain in words so I will put up some charts so that you guys can better understand just how this works. Make sure you check out James16's chart thread to learn the basics of price action before you proceed.

Eventually I thank James16 because of his excellent thread on PA and of course Larry Willi because of his enlightenment on COTs.

Pictures will be posted soon.

Larry Willi is the EXPERT
Would you mind sharing your thoughts here from time to time according to your own interpretation on COTs and crosses you're trading?
I'd really like to understand and see your method at work. thanks.

P.s.
I don't subscribe to Larry's reports.

This is a weekly chart of JPY futures. I use a 52 week sma to determine the trend, COT index is put to 26 months to determine the extremes. If you analyze the chart a bit you will see that the ads nearly always are extended at market bottoms and short at market tops. Little specs do the specific opposite. And you wonder why 95% of traders neglect

So what we would like to do is to follow along with the advertisements. When commercials are incredibly short, we short, also. and vice versa. Be careful that this is actually the futures market so when you return to spot forex USDJPY, you'll be shorting JPY, ie. longing USDJPY. This chart is from last week. Now we know that the commercials are short on JPYwe know that the JPY will depreciate, so we look for a bullish PA to form on the daily USDJPY chart.

EDIT: the chart below must say commercials short, specs . Sorry about that.

And today we know the direction of the trend is going to change, we look for a price action to form. A lot of you guys probably saw this pb off last week's close. If you have in long, remain steady because when the commercials are working the change generally endure some time. If you're in this commerce it ought to have generated 300 pips. Personally I am not in this trade but I am long AUD/JPY, which is precisely the exact same thing, only larger swings (commercials are extremely long on Aussie so I guessed maybe AUD/JPY is a better pair to trade) and smaller margin.

I've been in this trade from the start of this week once I read a market comment on DailyFx about carry trade unwinding and JPY may strenghen more and rate growth and all sort of stuff as it is the end of the world, and I was laughing, literally.

Originally Posted by ;

Larry Willi is your EXPERT
Would you mind sharing your thoughts here from time to time according to your own interpretation on COTs and crosses you are trading?
I'd really like to learn and see that your method at work. thanks.

P.s.
I don't subscribe to Larry's reports.

I don't either. But he's the shit.

More to the power of the Advertisements.
This transaction could yield 400 pips just by following the advertisements, blindly.

Wow, thank you for the thread. Definitely knowing the overall market sentiment could give a fantastic edge.

Can you use Implied Volatilities data to read market sentiment?

Http://online.wsj.com/article/SB1187..._us_whats_news

this is in the wall street journal. Read the commentaries on this week's rebound momentum.

I believe differently. IMO the rally will probably continue at least. We are going to see what Friday's COT will tell us. Be advised because my view is based on absolutely nothing just kidding, but I've never seen a commercial change lasts for just a week.

Originally Posted by ;

Wow, thank you for your own thread. Definitely knowing the overall market sentiment could give a great edge.

Did you also use Implied Volatilities data to see market sentiment?

I am not familiar with implied volatilities but I thought it had been utilized in Choices? I could be very wrong
No I do not use it. Can you kindly point me to a link where I can learn more about implied volatilities? Thank you.

Is your chart in place 6 by a paid support or is it available free from some broker? Thanks Paul