Did those thousand-pip moves excite you?
Before we start betting the farm based on our analysis of the COT report, remember that those were just specific cases of when the COT report signalled a perfect market reversal.
The best thing to do would be to back test and look at reasons why a reversal took place.
Was the economy booming?
Or was it in the middle of a recession?
Remember, the COT report measures the sentiment of traders during a specific period of time .
Like every other tool in your toolbox, using the COT report as an indicator does not always correlate to market reversals.
So take the time to study this report and get your own feel of what works and what doesn’t.
Also, before we bring this lesson to an end, always keep in mind that market prices aren’t driven by solely COT reports, stochastic, Fibonacci levels, etc.
The markets are driven by the millions of people reacting to economic analysis, fundamental reports, politics, Godzilla attacks, UFO sightings, Lady Gaga concerts – life in general!
It is how you use these tools that will help you be prepared to what lies ahead.