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Forex Trading Analysis Market Sentiment Analysis 4 - CFTC Position Report Trading Strategies

S cashback forex profit calculatorce the CFTC Position Report cashbackforexpipcalculator published weekly, the report is more useful as a measure of cashback forex sentiment for long term traders Now you may be asking: How do I turn so much of the data content in the report into a measure of market confidence to help me profit in my trading? One way to use the CFTC position report to guide your trading is to find cashbackforexprofitcalculator longs or net shorts that are in extremes If there are extremes in net longs or net shorts, this could suggest an impending market reversal because, if everyone in the market is long a particular currency, who else is going to buy it? The answer is, no one and if everyone in the market is short a currency, then who will be the next to go short? Of course, the answer is still, no one to make a similar analogy suppose you drive into a dead end, you can not continue to drive down, the only thing you can do is to back the car back Lets look at the forexcashbackprofitcalculator daily chart in the top half of the graph, we see the trend of the EUR/USD spot currency, at the same time, in the bottom half of the graph, we see the movement of the long and short positions in the euro futures. This movement is divided into three categories: commercial traders (blue line in the chart) large non-commercial traders (green line in the chart) small non-commercial traders (red line in the chart) We ignore commercial positions here since they are mainly used for hedging purposes and small retail traders are not our focus Lets see what has happened to the EUR/USD since the middle of 2008 as you can see. From July to September, EUR/USD fell steadily as short positions held by non-commercial traders increased (the green line in the chart slides) and EUR/USD also weakened In mid-September, net short positions in EUR/USD reached an extreme level of 45,650 positions Shortly after, traders started buying EUR futures At the same time, EUR/USD quickly moved up from levels around 1.2400 to 1.4700! Over the following year, the EUR futures position gradually shifted from net short to net long as the market expected, and the EUR/USD eventually touched a high of 1.5100 in early October 2009, when the net long EUR futures hit an extreme high of 51,000, before the trend reversed and the EUR/USD began to fall shortly afterwards isnt that remarkable! Just using the CFTC position reports as a trading indicator, you have caught two big market waves from October 2008 to January 2009 and January 2009 and November 2009 to March 2010 The first extreme net position appeared in mid-September 2009 If you have seen that the net short positions of speculative traders are at extreme levels, you may have bought at buying EUR/USD at levels around 1.2300, which could make you almost 2,000 pips in profit within the next few months! And if you found a net long EUR/USD position in September 2009 that was also at an extreme level, you would have probably sold EUR/USD, and your profit this time would have been about 1,500 pips! Youre just using the CFTC position report as an indicator to study the shift in market sentiment, if you had caught these two big market waves, your cumulative profit would have been 3,500 pips.