I think this is a perfect summary of the state of the affairs today.
I wanted to highlight the current sentiment in the USD and share more about the PsyQuation trading tool OFSi (order flow sentiment indicator).
We have experienced extreme bearishness towards the US Dollar over the past few months. We know this because the price of the USD has declined and also because the Commitment of Traders (COT) “commercials” have been net short.
The COT data is released weekly and is a breakdown of the holdings of open interest in the futures. The COT data goes back many decades and is one of the longest and most respected sentiment indicators in the trading world. The breakdown is made up of 3 categories:
- “non-commercial” who are large speculators.
- “commercial” traders are the ones who use the underlying commodity or financial future as part of the trade in their business.
- “non-commercial” small speculators are so small that they are placed in the “non-reportable” category.
The “Commercial” traders (see 2 above) are considered by the industry as the smart money as they are closest to the underlying demand and supply and should be taken very seriously.
It is very rare these days to see the Smart Money go net long USD. We could be at a very interesting bottom of the current USD selloff. If it feels weird going long that is what a sentiment trader should feel when trading extreme markets.
Coming back to the PsyQuation OFSi tool. We provide you with the latest sentiment of more than 20,000 live traders, updated every few seconds, with the ability to segment the order flow according to your own category of “smart money”. See this post for more details. For those of you who want to use the OFSi with their MT4 terminal you should follow these steps.
Mike’s Thought Piece
Yesterday my wife and I met with a financial planner. I was very reluctant to go, more precisely I wasn’t given a choice in the matter ?. I thought to myself why do I need to get advice from someone else, I am sure I know more than this guy about how to invest money. The planner said many interesting things but I will focus on just 2.
First, he said that he uses a planner himself. The reason is because he knows when it comes to money we are all biased. Even the best educated. I found that very much in line with what I preach at PsyQuation that you need a mentor to help identify your blind spots. PsyQuation itself plays its part as a Robo Trading Coach alerting you to certain trading mistakes. Remember if you are a premium member to activate your Trading Alerts (tutorial to follow – we are currently working on one).
Secondly, he said remember to measure backwards. Our society is too worried about the gap between what we have and what we don’t yet have. We keep measuring ourselves against the house or car or business or job or trading winnings we don’t yet have. He said why don’t you try and measure yourself backwards. Look at where you were 2 years ago and see how far you have come. If you haven’t achieved much then this forces you to ask questions – why. Perhaps you don’t set realistic goals. Perhaps you didn’t set any goals.
In conclusion there are some basic fundamentals one needs to do in life. One of them is having a plan. The other is measuring how you are doing against your plan. Focus on the things you can control and measure yourself backwards.