The forex market is “over-the-counter” with independent brokers and traders all over the world creating a non-centralized marketplace. While some brokers publish the volume produced by their client orders, it does not compare to the volume or open interest data available from a centralized exchange, such as a futures exchange. Statistics are available for all futures contracts traded,…
Barchart.com provides an easy way to chart COT data along with a particular futures price chart. The chart below shows the Daily Continuous Euro FX futures contract with a Commitment of Traders Line Chart indicator added. The COT data is not displayed as a percentage of the number of traders short or long, but rather as the number…
A popular tool used by futures traders to get a sense of sentiment is also applicable to spot forex traders. The Commitment of Traders (COT) report is released every Friday by the Commodity Futures Trading Commission (CFTC). The data is based on positions held as of the preceding Tuesday, which means the data is not real-time, but it’s still…
Sentiment indicators show the percentage, or raw data, of how many trades or traders have taken a particular position in a currency pair. For example, assume there are 100 traders trading a currency pair; if 60 of them are long and 40 are short, then 60% of traders are long on the currency pair. When the…
According to a recent report by the Bank for International Settlements (BIS), there are, on average, almost $6 trillion of forex transactions on a daily basis.1 With so many participants—most of whom are trading for speculative reasons—gaining an edge in the forex market is crucial. Fundamental analysis provides a broad view of a currency pair’s movements and technical analysis defines trends and helps to isolate turning…
Forex traders make money by betting that the value of a country’s currency will rise relative to another’s. For example, a forex trader might trade euros for dollars if they believe the euro markets are likely to face a downturn. Forex traders can also profit from interest rates—if a country’s central bank raises the interest…
Foreign exchange, or forex, trading can be highly profitable, but it also entails risks that are not present in other markets. Unlike domestic stock trading, forex traders are also exposed to currency risk when the value of a foreign currency goes up or down. In addition, forex markets also offer extremely high leverage, which can…
Since economic indicators gauge a country’s economic state, changes in the conditions reported will therefore directly affect the price and volume of a country’s currency. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency’s price. Third-party reports, technical factors, and many other things also…
The CPI measures change in the prices of consumer goods across over 200 different categories. This report, when compared to a nation’s exports, can be used to see if a country is making or losing money on its products and services. Be careful, however, to monitor the exports — it is a popular focus with many traders because the…
