Smart Money - Trading Tip 141007

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Following the "Smart Money"

Smart money or "in-the-know" traders are often ahead of the crowd when it comes to market moves. Traders are always looking for the magic indicator that will help them predict future moves in the currency market and knowing what these investors are doing is a good start.

One of the indicators that serious traders follow is the weekly Commitments of Traders (COT) report. Released every Tuesday by the Commodity Futures Trading Commission (CFTC), it is widely presumed the report shows where the "in the know investors" money is going.

Primarily Long Term Direction

Because the report is issued on a weekly basis, it is used generally for longer term planning. The information in the report helps identify extremes in the market and alerts traders to potential reversals in the major trends.

The investors that trade the futures covered by the COT report are generally big time investors with an ear to the ground, scanning for market moving information. As these investors change their positions from long/short, we can use this information to help guide our trading decisions.

Free Sources

There are many free resources which provide data and charts based upon the COT report.

Often your broker will provide this information, but if you would like further information, use your favorite search engine and search for "free COT charts". There will be several good providers to choose from in the search results.

As always, the COT information should be used for guidance only.

Wishing you trading success,
David Stevenson.

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