commitments of traders - upperman 2006

[...]... possible without the unconditional love and support of my family and especially of my dear wife and partner Kimberly, who has been a great source of strength for me over the years I xv Commitments of Traders CHAPTER 1 The Commitments of Traders Report n today’s computer-driven world, futures traders have access to hundreds of technical indicators Most of these indicators, however, share a common origin... it Since they are speculative traders, they have to liquidate their positions to realize a profit (if they have one) at some point Price The Commitment of Traders Report 11 slippage during that liquidation process may also cost them much of their profit, given the size of the position Large traders and large trading funds are at a disadvantage in this area Most individual traders are below the CFTC’s... direction of price I characterize these as “leading indicators.” A detailed study of the market participant activity can also reveal how specific market participants view market fundamentals The size of their position and whether they are accumulating or liquidating positions can at times reveal how they perceive future market conditions The data contained in the I 1 2 COMMITMENTS OF TRADERS Commitment of Traders. .. Department of Agriculture (USDA) report on the supply-and-demand situation in a particular commodity (such as corn, soybeans, etc.) is made public, the large commercials may already be aware of the tone, if not the content Therefore, they may already be positioned before the report is made public 12 COMMITMENTS OF TRADERS Technical analysis, on the other hand, is derived from price data Since the pool of. .. parameters, to obtain important knowledge and understanding of the unique behavior of market participants Because each market is unique, market behavior in 4 COMMITMENTS OF TRADERS one market may mean something entirely different in another Thus, within the context of a particular market, the objective is to search for and identify predictive patterns of behavior The first step is to understand who the market... consumer hedges against 10 COMMITMENTS OF TRADERS the risk of rising oat prices by buying oat futures, which are traded on the Chicago Board of Trade The long position essentially locks in a price for oats, and gives the cereal company the option (but not the obligation) to take delivery at the entry price of the long futures position Deliveries take place during the delivery period of the contract, which... business, you name it There is a trail of money behind me sitting on a trail of tables Still, doing the right thing for part of the time has always paid off By sitting and doing nothing with those shares, I had made more money than some of my astute colleagues who had more experience with this sort of thing Being naive sometimes does have its advantages Some of my colleagues deposited their shares... one of the most expensive Corvettes in the world! Not because it is a rare, fancy model It is just a regular Corvette, nothing special However, the shares I sold to purchase this car went on to increase in value more than 100-fold after I sold them So goes the saying: If we only knew yesterday what we know today! And that is the real basis of this book and my studies of the markets In Commitments of Traders, ... the time, but no one beats the market all of the time Furthermore, every good trader leaves a xii PREFACE little on the table most of the time That’s one of the telltale signatures of a profitable trade RISK DISCLOSURE Hypothetical performance results have many inherent limitations No representation is being made that any account will or is likely to achieve profits or losses similar to those shown In... Because of these complex issues, it is likely that some level of “cross-contamination” exists between categories The commercial category, however, widely regarded as the most important category, is likely to contain the least amount of cross-contamination, since it is more difficult to be classified as a hedger and verification is usually required Thus, I regard the commercial category as the most pure of . index. ISBN-13: 97 8-0 -4 7 1-7 196 5-6 (cloth) ISBN-10: 0-4 7 1-7 1965-X (cloth) 1. Commodity exchanges. 2. Stocks. 3. Investment analysis. 4. Portfolio management. I. Title. II. Series. HG6046.U66 2006 332.64—dc22 2005023676 Printed. www.wiley.com. Library of Congress Cataloging-in-Publication Data: Upperman, Floyd, 1966– Commitments of traders : strategies for tracking the market and trading profitably / Floyd Upperman. p. cm class="bi x0 y0 w0 h0" alt="" Commitments of Traders Strategies for Tracking the Market and Trading Profitably FLOYD UPPERMAN John Wiley & Sons, Inc. Commitments of Traders Founded in 1807,