Pivotfarm's blog

Most if not at all traders, be they day, swing or buy and holders have come across technical analysis. You know what I’m talking about! Those squiggly lines all the gurus seem to have on their charts! They consist of patterns like the famous ‘Head and Shoulders’, age old equations seen across nature like ‘Fibonacci’, even historic wave movements measured by ‘Elliott Wave’.

Retail Traders as a herd are wrong...most of the time (sorry guys its true).

This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group.

Retail Traders as a herd are wrong…most of the time (sorry guys its true).

This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group.

In the Eurozone, sovereign debt issues resurfaced with concerns about Irish and Portuguese debt. The weaker-than-expected Irish GDP data heightened fears that bank restructuring added further crippling weight to the government’s debt. Irish real GDP is currently 13% less than it was at its peak in the fourth quarter of 2007.

Live individual currency strength meter.

Retail Traders as a herd are wrong…most of the time (sorry guys its true).

This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group. For example if 72.99% of traders are long the USD/CHF we look for opportunities to short that pair.

Retail Traders as a herd are wrong...most of the time (sorry guys its true).

This daily report is designed to help traders find opportunities to trade against this group. The premise is very simple we are looking for 66% of retail traders to be trading either long or short a currency pair, we then look for opportunities to fade (trade against) this group. For example if 72.99% of traders are long the USD/CHF we look for opportunities to short that pair.

This week started with the announcement of the Basel III agreement. Under the new minimum capital requirements banks are required to hold top-quality capital totaling 7% of their risky assets, but not before 2019. Markets reacted with relief as the long lead-in time eased fears of a rush to raise capital. The second big thing was Bank of Japan’s intervention in the currency market for the first time since 2004. In Euroland, during the past week data has been disappointing suggesting that growth is now slowing.

This weeks analysis of the Commitment of Traders and Retail Positioning research. Tools to trade against the herd.

The bears were certainly back in town for the Euro, news out of Europe has been mixed. German macro data has been disappointing, showing that the overall euro area is entering a period of weaker growth. Also this past week, some European peripheral countries, and especially Portugal, Ireland, Spain and Greece, saw a rise to record levels in their 10-year bond and CDS spreads.

The Commitment of Traders Report is created by the CFTC – The Commodity Futures Trading Commission and is published weekly every Friday. This body gathers and publishes the open futures positions on all publicly traded US futures contracts as well as the corresponding options. The data consists of 3 main categories.

Commercial Traders – These are the bigger players in the markets, the smart money and consist of large firms that actually use the commodity being traded, includes companies like…BP in the Oil and Gas Market, Nestle in the Cocoa and Sugar market. The main function of these traders is to hedge the price of the commodity that they trade in.

We often hear figures about the 90% (or even more) that lose money on a consist basis. It’s a ‘fact’ often quoted by gurus and a common belief held by traders. The question for professional traders then becomes how do we benefit from this landslide of people on the wrong side of a trade?

Markets in a Flash

· As an appetite for risk has appeared in Europe on this Monday morning investors have been selling the safety of the greenback and making it look weak today.

· Prior to the open of the US equity markets the equity futures markets are higher this suggests that the European uptrend will be followed at the opening bell.

· Oil and Gold are moving higher today. Oil is just below $74.50.

Markets in a Flash

· As European markets opened and fell this morning and a correlating fall has been seen in the EUR/USD currency pair after comments by ECB council member Axel Weber suggested that that the ECB will support the region’s banks for longer than some investors expected.

· The USD/CAD saw a strong jump north breaking the 1.0500 level as Canadian Core CPI data came in less than expected.

· The GBP looks weak today along with the EUR as European equity markets fell. The JPY and USD seem to be strong against the two.