Track 'n Trade Futures End of Day

Commitment of Traders Introduction

Video Transcript

In this Track 'n Trade Pro Trading Training video, I want to talk to you about the psychology of the Commitment of Traders.

Now, we're looking at the Silver contract, this is the July 2004 Silver. You'll notice that we're starting a nice, long, beautiful uptrend. Then a strong sell-off happens, and then market starts to go sideways.

I want to talk to you about the Commitment of Traders. Now, the Commitment of Traders, of course, we're going to turn that on. Now, the blue lines are the large speculators, the red lines are the large commercials and the green lines, those are the little small speculator guys. Now, the yellow line, of course, that's our volume in the market. Then, we have these red and blue lines, which are the indicators, which is our indicator line, where we derive our Buy/Sell Signals.

Now, you'll notice that we're receiving a little Sell Signal, right here. Then, we receive a Buy Signal, right here. Then, at the top of this market, I think this market actually caught everybody off guard. They might have expected it to go a little bit higher. So, the large commercials didn't start dumping their contracts or maybe felt like the market wasn't going to go down off of this first drop. So, they held their contracts until after the market had dropped a little ways and decided they better start jumping ship, too. I think this is one where the market prices motivated the large speculators to start dumping contracts. Of course, I think that down here in the beginning, I think that prices and I think that the large speculators motivated the market to start accumulating price; and to increase the market price.

This is very good example of how the Commitment of Traders works in Silver. Silver is a wonderful market for the Commitment of Traders. It does a good job at giving Buy/Sell Signals on it. You'll notice that we're picking up, even through this little narrow channel area, very few signals that's going to whipsaw us in out of the market. You can see down here in the indicators, where the blue lines are starting to decrease. This is where the large speculators are liquidating contracts, going...thinking that maybe it's time to go short. Then, the market starts to change positions, right in here. Then they change their minds. They say- oh, let's go long then. Right in here, we're going to change our positions and we're going to start accumulating contracts. This is where we see that the market starts to increase and then they hold their positions, all the way up through this little reversal, right in here. Then, all the way up through this top trend. It's not clear until right over in this very peak area, where they decide that it's time to start liquidating contracts. That's where we get our Sell Signal and the market starts to drop off.