Trade Stocks and Commodities with the Insiders: Secrets of the COT Report by Larry Williams

I recommend this book. This is quite a different book about trading. It is original because its author explains how the COT report may be useful in your trading. For me the COT report is necessary in order to have a long term on the market. That is why I decided to write this brief review.

The main idea for me is that the market as the Forex market is a zero sum game, and we have to be very carefull and to monitor what the big guys are doing and what is their open interest.

My idea is that for short term speculation matters the information by Oanda. And as we know 99 % of the volume in the Forex market is by its nature. However it would explain theoretically only the short term volatility and can be used for short term volatility patterns. I try to decipher several patterns in the group the Oanda oracle but still it is an open project and everyone is invited to participate.

However we may look for a longer outlook in the market. And this outlook can be achieved thanks to the COT report.

The idea is that the Big Guys the large speculators cannot hide their positions because they are obligend by the law to disclose them in the COT report. And we could use that information.

In theory the ALrge speculators, or the so called smart money thay have a clearer picture on the market than all the others. There is some kind of insider information that is communicated only among them in closed circels and of course we are not allowed in that information flow.

What really matters is not the fundamental outlook but how this fundamental information is analysysed and processed by the inders Fundamental Research departments, and most of all what decisions the insiders will take based on that information. As you can guess there may be a gap between the fundamental information and its interpreations.

The analysis of the COT charts allow to see the decisions that are making the large speculators and in fact that is really what matters. By seeing what they decide you can evaluate with some degree of probability from all the fundamental data what they believe is more important and monitor that information as predictive fundamental information. So every change in the COT reposrt should be compared with the most probablilistically important fundamental situation. In that way you can have a feed back, that is inexistent with the analysis alone. I think the COT data is more reliable as feed back than the price, because in the market a lot of things happen and some of the events are stochastic events.

Here in the book Trade Stocks and Commodities with the Insiders: Secrets of the COT Report written by Larry Williams you can find a lot of interesting information and I may say this book is not as the others.

However the information in this COT report could be analysed with machine learning algorythms. I had some very interesting but still theoretical and in sample results.

In that direction an new look in the COT may evolve.