OUR METHOD
 

A few words about our method. Without going in every detail we produce following metrics:

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- Indices. They are like thermometers, they show how hot or cold markets are. Indices help answer a question like this - if speculators are 10,000 contracts long - is this a lot? Is this market in a state of bullish euphoria or barely alive? Indices produce real picture if markets are overbought, oversold or neutral.

- Speed of buying/selling. Another metric that helps answer if market players buy 1,000 contracts in one week - is this massive or not?

- Zones of euphoria or depression. We identify when markets enter state of euphoria (overbought) or depression (oversold).

- Confidence. When markets hit zones of euphoria/depression we often ask ourselves - how long will the party last? Are players confident enough to continue buying/selling?

- Regression analysis of zones. This is a bit scientific. We have a set of values (weekly buying/selling) and we work out a mathematic function that describes distribution of values. Say, first reading is 10, second is 25, third is 40. We draw a chart line that shows a distribution pattern using these values. In the above example you understand that direction (angle) of this line will be strongly upward but in reality it is not that simple. This metric tells us if trend weakens or reverses.

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This is how we analyze markets. A bit different to what other COT analysts do, isn't it?

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