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0:07so can we talk about the commodity
0:09markets it's very important that you
0:10read just disclaimers
0:12everything that's being discussed in
0:14this segment of our discussion on
0:16Commodities any trade
0:20discussion or idea or concept should be
0:24viewed in the light of a paper trade not
0:26an actual trade I'm not a CTA so I'm not
0:28licensed to get trade advice about
0:30Commodities but I'm sharing ideas on how
0:32I've looked at the commodity Market over
0:34the last 20 plus years and where I've
0:36seen consistency finding directional
0:38bias and support resistance ideas
0:48okay all right so we are in the first of
0:51the June 2017 content ICT mentorship uh
0:55this is ICT commodity trading lesson one
0:57commitment of Traders how I use the data
1:01okay and the first thing we're gonna be
1:04looking at is the raw data now when we
1:06look at the commitment Traders report uh
1:09what is that well the raw data comes by
1:11way of a weekly report released by The
1:13cftc and you can find this on
1:17www.cftc gov
1:20and what you want to look for is you
1:21want to be looking at the Futures
1:23Contract only in the short format and if
1:26you do this under the CME which is the
1:28Chicago Mercantile Exchange we can find
1:31the currencies that trade as Comm dials
1:33and one of the Comm dials are
1:36Japanese Yen and this is the most recent
1:39short format
1:41commitment of Traders report for the
1:43Japanese Yen
1:45as you can see here this is just for the
1:47Japanese Yen Futures Contract now the
1:50cftc website gives you the opportunity
1:52to pull up the options positions as well
1:54I'm not concerning myself with that I
1:56never concern myself with that at all I
1:58look at only the Futures positions and
2:01you want to be looking in the center
2:03column here where it says commercial
2:06and when you see that commercial area
2:08it's going to give you a little column
2:10that says long to the left and then
2:12short to the right directly underneath
2:13that long column you'll see that there
2:16is
2:17143
2:19450 contracts that's the commercial long
2:22positions
2:24and then to the right of that underneath
2:26the short column it's 76 426 contracts
2:31short
2:32the way we get the net position is we
2:34subtract the two to get the difference
2:36and if it's a positive number it's net
2:38long if it's a negative number it's net
2:40short in this case we have 67 024
2:43contracts long that by the difference
2:46between the long positions and the short
2:49position so there's a a net long
2:51position of sixty seven thousand twenty
2:54four contracts long
2:56now basically this tells us nothing
2:59about their current hedging program so
3:02what we have to do is have to look
3:03deeper and go behind the numbers and see
3:05what it is they've been doing
3:08thank you
3:11okay net Trader's position line chart
3:13and with this chart we can track the
3:16three main classes of Traders
3:19and again you would find this on
3:23www.barchart.com you see me use it many
3:25times in the past
3:27and what you're going to be doing is
3:28you're going to be plotting a daily
3:29chart and you'll be including in the
3:32indicator portion on the bottom of the
3:34chart you're going to be adding the net
3:35Trader's position line chart
3:38and the duration you want to be
3:40displaying is at least one year's worth
3:42of price action
3:45and the commercial Traders are typically
3:46on bar chart.com shown as the red line
3:49at the bottom of the chart
3:51the large Traders are shown as in a
3:53green line and the small speculators are
3:56always shown in as a blue line
3:59but when we look at this price action
4:01against the
4:03net Trader position line chart I want
4:05you to visually see the hedging programs
4:08by the commercial Traders now when I
4:11first got into trading obviously my
4:13mentor was Larry Williams much like
4:15everyone else uh that's ever come across
4:18his material uh he's like The Godfather
4:20if you will of the cot data
4:22so everything he mentioned in his 1970
4:24book how I made a million dollars
4:26trading Commodities last year using the
4:29commercial information that was like
4:32light years ahead of everything else
4:34naturally everyone you know flocked to
4:37just looking at whether the commercials
4:38are knit long or if they're not short
4:41much like everyone else I found out by
4:43trial and error that it isn't that easy
4:46you gotta go in there and do some more
4:47research I thought clearly by looking at
4:51the commercials uh if they were buying
4:53so therefore I had to be a buyer too but
4:55because their nature
4:57of what they are as a as a participant
5:00in the marketplace they are usually
5:03large corporate producers or users of
5:07Commodities and you know Commodities
5:10like a Comm dial is the same thing uh
5:12currencies are a commodity they're
5:14they're bought and sold they're provided
5:16for in terms of allowing Global Commerce
5:19uh you know providing loans
5:23making transactions all over the world
5:26and because there's a difference of all
5:28these countries around the world there's
5:30going to be a change from one currency
5:33to the other to do business or make
5:36transactions in another country so just
5:38like we would look at for instance like
5:40Coco for Hershey where they make a large
5:43uh production of chocolate you know
5:48every day their number one you know
5:50ingredient is sugar and cocoa so if we
5:54follow those Commodities you naturally
5:57cocoa is going to have a lot of
5:59fundamental supply and demand factors
6:01that go along with it and Hershey's
6:03going to have a trained accredited staff
6:04to track all those things to be able to
6:06you know keep a closer eye on whether
6:09the price is really cheap or it's
6:11expensive if they think it's going to be
6:12expensive in the near future they're
6:14going to be much more aggressive about
6:15buying it because they want to lock in
6:17lower prices because they know at a
6:18later time prices will go higher the
6:20same thing occurs with currencies so
6:23if we look at the net Trader's position
6:26line chart it gives us a graphic
6:28depiction of the overall net basis the
6:31numbers are they above the zero line or
6:34below this Airline
6:36by itself it doesn't mean anything but
6:38when we look at the information a little
6:41bit closer in a different light you'll
6:43have a lot better understanding about
6:45what they're doing as a hedger
6:48so that brings us to the commercial
6:50hedging so naturally if we pull up a bar
6:53chart.com chart of the Japanese Yen and
6:57you put the net trade Association line
6:59chart one the chart itself with about
7:01one year's worth of data this is what
7:03you get
7:04so
7:06by itself again it means absolutely
7:08nothing you can see between today's
7:10present date of June 5th 2017 and
7:15December of 2016 the commercials the red
7:19line at the bottom of the chart shows
7:20that red line above the zero line
7:23that zero line delineates whether we're
7:26net longer net short so if that red
7:29lines above the zero line from December
7:312016 to present time June 2017 that
7:35means that the commercials have been net
7:37long for over six months
7:40so
7:41what does that mean you buy I'll only
7:43just buy it doesn't mean you just buy
7:45there's other things you have to look at
7:47but by itself it means that they are in
7:49a buy program okay so there's a buy
7:52program and then there's hedging
7:53programs the buy program is a
7:57macro perspective or macro program where
8:00they focus the bulk of their buying and
8:03while they'll hedge and sell some
8:05they'll be hedging in prices by selling
8:08the shorter term
8:11buy program
8:15can be seen by looking at the 12 to 6
8:19month durations in other words we look
8:21back a year to see what they've done the
8:23highest
8:25net long position and the lowest net
8:27long position they've had and the lowest
8:31net short position and the highest net
8:33short position they've had so we break
8:36the market down in two categories what
8:38was their action above that zero line as
8:41a whole what was the highest reading in
8:43the lowest reading while above the zero
8:44line and what was the highest reading in
8:46the lowest reading below the zero line
8:48so there's a buy program when they're
8:50above the zero line in a Cell program
8:51when they're below it but there's also
8:53hedging that goes on Commercial hedging
8:55programs that we need to be aware of and
8:58you can track them by using this
9:00information but you have to look at it
9:01differently you can't look at it like
9:03this because this is what retail sees
9:05obviously retail isn't going to have the
9:07the true perspective on what price is
9:09doing from a commercial or institutional
9:11perspective so what I have to do is
9:13change your perspective on how we look
9:15at it so let's take a look at it closer
9:17now
9:18so okay what we're focusing on here is
9:20the bottom of the chart these three
9:22lines here again they represent the
9:24green line is the large speculators big
9:26large funds or big private traders that
9:29have a lot of position size small
9:31speculators with the blue line that's
9:32usually this uh the public they have no
9:34idea what's going on and in the
9:35commodity commercials or large
9:38speculators in terms of like a
9:41commercial user or producer of a
9:43commodity in this case if it's a bank
9:45okay our lending institution they would
9:47be in that red line
9:49so the red line is really what we're
9:51going to be tracking we're only
9:52interested in that line we don't care
9:53what the green line is because it's
9:55always going to be diametrically opposed
9:56to the actions or positions of that of
9:59the red line and the blue line we could
10:01care less about because that's the
10:02street money less informed crowd
10:05so what I've done here is I've removed
10:07okay by way of paint and you can do this
10:11if you want to but it's not necessary
10:13once you understand the procedure or
10:15process that you go through by looking
10:17at Price you won't need to do this over
10:19time you're just your eye will be
10:21trained to be able to look at this and
10:22be able to see it on its own and you'll
10:24know just by looking at a standard
10:25Trader system chart
10:27it'll jump off at the quick first glance
10:30you'll see exactly what's going on
10:31without having to do all this you know
10:34acrobatics I'm going to show you with
10:35removing the lines with paint it's not
10:36necessary but I'll say this before we go
10:39into it for those individuals that
10:41really want to have this data and be
10:43able to use it like this and see it
10:45graphically you can start collecting the
10:47data and you can download historical
10:49data for all the Commodities that you
10:50want to track and for those individuals
10:52that are in here they're only interested
10:53in the currency markets if you like your
10:56favorite pairs just download historical
10:58data about the net trade assessment
11:02um for that particular currency and for
11:04instance say it's a Japanese Yen you
11:05want to be a specialist in you can
11:07download years worth of data on cot data
11:11and plot the commercials net long
11:13positions and net short positions and it
11:15would look like like this you could plot
11:16it with Excel something like that
11:18and I'm certain some of you guys that
11:20are really uh you know Cracker Jack with
11:22uh programming for mt4 you could
11:24probably create an indicator that does
11:25this you know where it plots the uh net
11:28Trader's position for the commercials
11:29only that way you can get a range and
11:32determine what the highest high and the
11:33lowest low is in the last six months in
11:35the last 12 months and be able to get
11:37that range to Define that like we're
11:38going to discuss here but without having
11:40to do all that it's not necessary but if
11:42you want to do it there's things like
11:43that you can do but what I do is I
11:46quickly look at the chart and I see it
11:48as I'm going to outline it here so
11:50obviously we have about a Year's worth
11:51of data here and you can see the red
11:53line is the commercial activity and
11:55right in December uh rated before
11:57actually December right like the last
11:59week of November you can see they swung
12:01from net short position below the zero
12:03basis line to net long in the last week
12:07or so of November 2016 then they've
12:10remained above the zero line from that
12:13point on to now
12:15so again by itself it doesn't tell us
12:17anything and this is the reason why
12:19people walk away from cot data they say
12:21it's useless it's always hindsight it
12:24can't be used in you know in terms of
12:26being able to have prognostication about
12:28what price is going to do and we're
12:29going to dispel that disbelief in this
12:31teaching here so what we're going to do
12:32is we're going to focus on when the
12:35Market's below the zero line okay so
12:37zero line basis below zero is when the
12:41net position is bearish or short the
12:44position above the zero line okay or the
12:47Net Zero Sum basis is going to be
12:49bullish okay or they're net long
12:52when we have those conditions there's
12:54going to be things that we can do to
12:55look for optimal optimal trade entries
12:58okay not the optimal trade entry pattern
13:00but for optimal trade conditions for
13:01entries
13:03so we're going to look at this price
13:04action segment here and I want you to
13:06follow along with me okay we're going to
13:08look in this whole portion of price
13:09action a lot closer and use this
13:11information just like we see it here on
13:13this chart we're going to change it
13:15slightly in terms of the perspective but
13:17wait we're not manipulating the data at
13:19all we're just really zooming in and
13:22looking at it from a hedging perspective
13:24because there's a hedging program that I
13:25want you to see in price action that you
13:27can track with this net
13:29some zero line and whether the
13:32commercials are net longer and that
13:33short and the activity of their net
13:35positions
13:38okay so this is January 2016 all the way
13:42to January
13:452017 okay and what we're going to do is
13:48we're going to take this entire price
13:50action and we're going to divide it in
13:52two segments we're going to do the first
13:54portion up to January of 2017. we're
13:59going to start around
14:01um well beginning of the year 2016 I'm
14:05going to break that down but before we
14:07get into it I want you to look at what
14:08price was doing the whole first half of
14:112016.
14:14if you were looking at that and
14:15obviously we had the benefit of
14:16hindsight here but for the sake of
14:18argument
14:19looking at institutional order flow
14:22were the bullish order blocks being
14:25respected and were up close candles or
14:28what would be deemed as a bearish order
14:31block were they being broken in other
14:33words are we seeing price being
14:35supported by discount arrays
14:38clearly beyond the shadow of a doubt
14:40it's there so we know the institutional
14:42order flow was bullish from January 2016
14:45or February 2016 when price made that
14:48low
14:48and all the way through
14:51until around the mid-july going into the
14:55summer months there was a small little
14:58pullback that broke a short-term low and
15:01then price resumed higher again and it
15:04had a lot of issues with getting above
15:06the 1.00 level on the Japanese Yen which
15:10we'll look at at the end of this
15:11teaching why it struggled with that
15:13level and finally reversed but we can
15:16see how institutional order flow was
15:17bullish every time a short-term low was
15:20taken out price rallied any time a price
15:22trade down into a down closed candle it
15:24was supported as a bull shoulder block
15:26and all of the premium PD arrays were
15:29always broken through there was no
15:31premium effect that was lasting
15:35but if we look at just the cot data down
15:38here the commercials the red line that
15:40was below the zero line so that would be
15:42telling us to do what go short based on
15:45the traditional perspective of
15:47commitment Traders and this is why
15:49everyone discounted Larry Williams stuff
15:52for a long long time and still do today
15:55and if you look at how I'm going to show
15:58you how to use this information it takes
16:00cot data to light years ahead where
16:04everyone else doesn't even see it like
16:05this they don't even turn they don't
16:07interpret price like this they don't
16:08interpret CO2 data like this but this is
16:10exactly how you track what their hedging
16:12programs are so while they had a cell
16:15program
16:16because they're below the zero line or
16:19the zero line basis was bearish because
16:21they were below zero line from January
16:24February 2016 all the way to the last or
16:29middle week of November 2016. you can
16:31see that graphically with the red line
16:33going above the zero so while they have
16:35a
16:37bearish or sell program going on at the
16:41time for many months they were selling
16:44heavily okay as the market was rallying
16:46they were keeping cell program active
16:50but you can still see institutional
16:52order flow being bullish now this is
16:53what's going to confuse some of you okay
16:55we're going to cover the details later
16:56in this teaching but for now what you're
16:58focusing on primarily is was the
17:00institutional order flow telling you
17:02it's going to tell you whether there's
17:04buying or selling going on by Price
17:06action alone
17:08what we're going to do is decipher that
17:10from a cot standpoint okay and add that
17:13filter process even though that the cot
17:16data is below the zero line
17:18for many months okay we can still fare
17:21it out when the commercials step in and
17:24do aggressive hedging and buying even
17:27though they're in that below zero line
17:29or a cell program you can see when they
17:31get aggressive and buy
17:33and cause price to go higher while still
17:36keeping the cot data below the zero line
17:38so anyone tracking the commit
17:41administrators report for the Japanese
17:42Yen they're not following along
17:45in other words it doesn't look germane
17:47to them it's completely alien it doesn't
17:49make any sense the Japanese friends
17:51rallying rallying rallying but they're
17:53holding a net short position by the
17:54commercials how can that be why is that
17:56happening well the commercials
17:59again they could be Banks they could be
18:01selling uh currency you know providing
18:03liquidity all that's being reflected in
18:05these numbers as a net basis so just
18:08because they're below the zero line
18:10doesn't mean that we can't see buying
18:12and sell as well because it can happen
18:14on both sides of the marketplace
18:17but anything above the zero line that's
18:20obviously bullish
18:24and we would have to consider anything
18:25below the zero line bearish but we do
18:28not limit ourselves to just focusing on
18:31selling only below the zero line or
18:33buying above the zero line because you
18:34can do both the way you decipher it is
18:36what is institutional order flow at the
18:38time what are the conditions right now
18:39suggesting in price action if bullish
18:42order blocks are being supporting price
18:43any lows that are being taken out reject
18:46price as a stop run on sell stops and
18:48then all of a sudden it rallies and
18:50breaks through will be otherwise deemed
18:51as a premium array then institutional
18:54order flow is bullish and you can see
18:57buy programs kick in
18:59in a hedging program while a larger cell
19:03program is underway now again let me
19:05rephrase that
19:07a larger long-term cell program can
19:10still have bullish hedging buy programs
19:14in it
19:15and you'll see that now as we go through
19:17this segment of price action for the
19:19Japanese Yen
19:22okay so what I have here is I have price
19:23trained in on that segment of price and
19:28I removed the
19:29large speculators line and the small
19:31speculator's line
19:33so that way we can highlight
19:35all of the price action by way of the
19:38net Trader's position line chart on the
19:40commercials which is the red line here
19:42now I want you to see how price stayed
19:45higher going higher making higher highs
19:47and and finding support at both shoulder
19:50blocks running out short-term lows and
19:52then rallying but finding their way
19:54through any high or premium array so the
19:59institutional order flow all the way
20:01through to the middle of August going
20:03into September was bullish
20:06but how do we reconcile this net short
20:08position by the commercials because
20:10they're below the zero line it doesn't
20:12make any sense unless we break it down
20:14and use the six month range and the 12
20:17month range idea of looking for the
20:19highest and the lowest reading on their
20:21net position by the commercials we don't
20:23care about what those long-term uh
20:26speculators that uh you know are in the
20:28blue line we don't care about the small
20:29specs we don't care about the large
20:31specs we're only caring about what the
20:33actions of this red line is because it's
20:35going to show us and reflect what their
20:36hedging program is at the current time
20:39so anytime when you're looking at cot
20:41data you want to look at where we're at
20:43right now and go back six months because
20:45there's your six month hedging program
20:46they have a 12-month hedging program so
20:49by blending the two you can get
20:51short-term quarterly effect trades now
20:53think we talked about that there's
20:55quarterly effects every three or four
20:56months there's a shift in Market
20:58structure and the market trades in a
21:01sustained move
21:02for about two and a half months or so
21:04maybe three months but every quarter or
21:07so of the year there's a shift in market
21:09structuring and this helps you find that
21:12by looking at the six month range of the
21:14highest high and lowest low the
21:15commercial net position has been
21:19that is seen with this shaded area so
21:21you can see the highest high and the
21:23lowest low is being basically blocked
21:25out with that shaded area so once you
21:27know what that is you divide that in
21:28half you get that range so we can go
21:31back 12 months and in six months
21:34intervals but in here you can see how
21:37the net positions have stayed in a very
21:39tight range even that can tell us a gold
21:43mine worth of information
21:45look what suddenly happens when you
21:47decipher the information like this you
21:49do not see CO2 data like this and Larry
21:51Williams doesn't even do this with CO2
21:53data this is something I looked at Price
21:55forever and I knew there was something
21:58going on behind the scenes and I
22:00literally said you know what if
22:03price can trade in trading ranges
22:06so can this information but if they're
22:09going to be doing buying and selling it
22:11can't be hidden if that's true I should
22:14see it if I look at the data in terms of
22:18the range or time remember ipta well I
22:21applied similar things to this so I
22:24looked at six month intervals and 12
22:25month intervals three month intervals
22:28four four months sorry four year
22:31intervals three year intervals two year
22:33intervals one year interval and then six
22:35month intervals
22:37so if you go back through the data and
22:39you look at it like that you'll get a
22:41clear depiction of what the commercials
22:43are actually doing
22:44now if you look at these green little
22:46nodules in here okay even though that
22:49we're below the zero line by determining
22:51the total range in the last six months
22:53in the last 12 months we can get every
22:56time their hedging program kicks in even
22:58though there's a larger cell program is
23:00underway by keeping the net positions
23:02below zero
23:03their hedging program can be deciphered
23:06by looking at these little nodules once
23:07you determine the range
23:09the first one here you can see how all
23:12that bind took place
23:13the second one here you see where they
23:15made a low there it bought off of a
23:17bullish order block that was seen in the
23:19last week of April filling in a void
23:23and we had this area here where they
23:25were buying again after we've taken out
23:26a short-term low it was seen in the last
23:29week of June and price resumed but then
23:31found long-term resistance at that 1.00
23:34level which we'll look at at the last
23:35slide of this presentation and you'll
23:37see why clearly that had a struggling
23:39point there and we're finally reversed
23:40by breaking a short term low only after
23:43trading at that 1.00 level a few times
23:47failing to get above it and finally
23:48breaking Market structure to a downside
23:51and then you can see the commercials
23:53finally started building up a larger net
23:57long position above the zero line so
23:59there's zero line basis is now bullish
24:01so now they're in a buy program but
24:03they're going to be hedging early they
24:05start doing it early but they make the
24:08highs and the lows in the markets by
24:09doing that
24:12so now we're going to look at the last
24:14week or so of November 2016 all the way
24:18to present time
24:19and again I'm going to counsel you to
24:21look at what the cot data looks like by
24:23plotting a
24:25net traded physician line chart as
24:28everyone else would do with this with
24:29the information that you would get with
24:31uh commitment trades reports
24:33this is what it would look like if you
24:35zoomed in on a daily chart again it
24:37doesn't tell you much except for it
24:38isn't that long and granted they have
24:40been sending the Japanese Yen higher as
24:42a result of that but what was
24:44institutional order flow as well
24:46our down candle supporting price when it
24:48trades back down to it our up close
24:50candles being broken as PD arrays our
24:53old highs being taken out and are we
24:56seeing support by Price moving down into
24:58what would be otherwise a discount array
25:00yes we're seeing that all throughout
25:02this entire price segment from the
25:05midpoint of January I'm sorry the
25:09midpoint of December
25:10going into the January where we made
25:12that turning point now commercials have
25:14really moved to a net long position now
25:16they're in a buy program but now because
25:19we're in a buy program does that mean it
25:20can't sell off no it can have sell-offs
25:22but we're going to focus primarily on
25:24what is the range the last six months
25:27okay of the commercial activity but
25:30first we got to focus on what that looks
25:31like so we're going to take everything
25:34down to just the commercial line and I
25:36removed the small specs line and the
25:38large speculators did not manipulate the
25:40price or do anything with the indicator
25:42all I did was erase everything with
25:44paint so that way we can clearly see
25:45what's going on
25:47I want you to look at by taking that
25:49information determine the highest high
25:51and the lowest low in the range defining
25:54that basis line creating its own new
25:56basis line we can see where the buying
25:59kicks in and you see nodules kicking in
26:02in January we can see one in mid-march
26:05and we can see one in the last week of
26:07May and those are the respective time
26:09periods where the market sees the
26:11greatest in advances in price going
26:13higher
26:16all through here Market was bullish
26:19all through here we're currently bullish
26:21as well if you look at the price of
26:23Japanese Yen right now and go to the
26:25left in the last week of April this year
26:28you can see there's a fair value Gap up
26:29there at 91.50 so it kind of gives you
26:32an insight about where we think based on
26:34what we're talking about here where a
26:36Japanese Yen might go at least on the
26:38short term
26:39and we're using the hedging program as
26:42outlined here as a basis for that
26:46so when we look at commercial hedging
26:48we're not looking just at whether
26:50they're not long and that short but that
26:52does give us the buy or sell program
26:54that they're operating in but inside
26:55that buy and sell program
26:57or buy and sell program I should say
26:59like that there are hedging programs
27:01that go on because their nature of their
27:04speculation in the marketplace is to
27:06lock in good prices for their
27:08manufacturing of commodity or a good and
27:12to do that efficiently they have to make
27:14sure prices are obtained at very
27:17discount or
27:19friendly levels you know you don't want
27:21to be buying if you're cursing you don't
27:22be buying cocoa later on when you've
27:25already seen fundamentals are suggesting
27:26it's going to be higher six months from
27:27now or a year from now you're not going
27:29to be doing all your buying then you're
27:30going to allocate a lot more money now
27:32to buy UPS uh stock for that so that way
27:36when prices go higher you've made a
27:38better return on your investment and
27:41keeps cost low and that's the nature of
27:43hedging so the same thing happens with
27:45the banks and lending institutions you
27:47know the value of money is going to be
27:49fluctuating all the time so they're
27:51trained accredited staffs that do those
27:53types of things
27:54they will invest and buy and sell based
27:57on those
27:59Notions that they're supplying demand
28:01factors that they have an assessment on
28:03I'm not smart enough to know what they
28:05are I've never claimed to know that and
28:06you're never going to know that from me
28:07because I I don't know it personally but
28:09I can see what they're doing graphically
28:11and they can't hide it from me and now
28:13because I've shared it with you you can
28:16do the same thing there's nothing that
28:18they can they can't hide it from you
28:19there's nothing to worry about they're
28:21not going to be able to hide in the
28:22future because you now know how to do it
28:23it's just the data
28:26while Larry Williams back in the 70s and
28:2860s you know he had
28:31figured out then but only at extremes
28:33and that's what I'm going to say in in
28:35closing here when we look at the
28:37commitment of Traders report
28:39and we applied on uh Traders
28:42uh basis whether it's a net longer net
28:43short on the commercials if we get to a
28:46four-year extreme or a two-year extreme
28:48or a 12-month extreme generally there's
28:50usually a long-term Trend reversal at
28:52play and the commercials will sometimes
28:53factor that in with their own
28:56movements in the marketplace
28:58by having those extremes we will
29:01discount any short-term hedging program
29:02if we get to a four-year two-year or one
29:06year extreme of the highest high and the
29:08lowest low of their net positions
29:11but let's look at this segment here
29:12again a little bit closer where the
29:14commercials were below the zero line
29:16and this section over here where they're
29:18above the zero line when we see those
29:20conditions okay the red line that's a
29:23cell program the red shaded area when
29:24it's like that below the zero line that
29:26is a cell program doesn't mean you can't
29:28see buying going on but you have to look
29:30at in the form of the hedging program
29:32that goes on look for the small
29:34short-term ranges and when they go above
29:36the new range that you would Define as
29:37we just mentioned in outline a moment
29:39ago you can see where they're buying and
29:41selling is taking place
29:43below the zero line the best conditions
29:46are
29:47looking for shorts that means if you can
29:49get institutional order flow bearish you
29:51want to look for net short positions by
29:53the commercials and at premium erase and
29:56that would be the ideal scenario but you
29:58can still get by hedging programs inside
30:01that long-term Soul program and again I
30:04know this is going to confuse some of
30:06you but you're gonna have to watch this
30:07video several different times because
30:09you're going to see
30:10by looking at it multiple times and
30:13listening you'll see that there's two
30:16factors taking place here long-term buy
30:18and sell programs based on the Zero line
30:21whether above or below it and then they
30:23hedge even during those periods because
30:26they're not just buying all one time and
30:28selling all one time they're moving back
30:29and forth in the marketplace around
30:31specific price levels when they create
30:33these nodules in the hedging program
30:35those levels are significant in the
30:38future they're going to be key price
30:41points as a PD array
30:43make sure you have that in your charts
30:45and note them by using the cot hedging
30:47program technique that I just taught you
30:49here in the green shaded area that is
30:51ideally going to be seeing the best buys
30:53when the market is creating discount
30:55arrays and institutional overflows
30:57bullish but it doesn't mean you can't be
30:59selling short when the short term six
31:02month or 12 month range indicates that
31:04the commercials are net short in the new
31:06adjusted range as in other words we
31:09looked at the last highest high and
31:10lowest low in the last six months and 12
31:12months even if they're above the zero
31:13line while that's a bullish buy program
31:16long term they could still be doing
31:18short term selling hedging programs in
31:21there and it causes price to go lower
31:23but you have to look at things in terms
31:24of blending three different things
31:26you're looking at the program of buying
31:29and selling whether they're above or
31:30below zero line then you look at the
31:32hedging program based on the range of
31:34the highest high and lowest lows of
31:36commercials in the last six months in
31:37the last 12 months and then using
31:40institutional order flow what is price
31:41telling you is it respecting discount
31:44arrays or premium arrays
31:47and by blending those things you can get
31:49to the truth of what the Market's
31:50actually doing and you'll know what
31:51institutional order flow is with the
31:53greatest of confidence
31:57so commercial hedging programs you know
31:59if commercials are above or below the
32:01net sum zero line both sides of the
32:03market can be traded
32:05the current range of the commercial's
32:07net position is referred to
32:10if institutional order flow is bullish
32:12we're going to be blending discount PD
32:14arrays and the last 12 or 6 month net
32:17long commercial readings for long trades
32:20now again that's when we see those
32:22little bullish nodules in the new
32:24defined range again this can be ideally
32:27seen when we're above the zero line
32:31if institution order flow is bearish
32:33we're gonna be blending premium PD
32:34arrays in the 12 or 6 month range of the
32:37net short commercial readings for short
32:39trades
32:42the best conditions are seen when both
32:43net sum basis agree with institutional
32:46order flow and PDA rate Matrix
32:48confluences
32:52the long-term commercial activity
32:55the net sum zero line delineates the net
32:57buying and or net selling now retail
33:00traders that know about the net Trader
33:02Association chart only look at whether
33:03commercials are that long for
33:05bullishness or net short for bearishness
33:07on the market
33:08the smart money can be tracked by
33:10focusing on the 12 month and six month
33:13range of the commercial net position
33:16if the commercials are above Nets zero
33:18line we're gonna be focusing on the 12
33:20to 6 month net long readings
33:23if commercials are below the zero line
33:25we're gonna be focusing on the 12 or 6
33:27month range net short positions we blend
33:30these conditions with pdra Matrix and
33:33institutional order flow for optimal
33:35results in directional analysis so with
33:37this teaching what we've done
33:39it's we were able to decipher what the
33:42commercial actions are whether they're
33:44buying or selling and not relying so
33:46much on whether they're below or above a
33:48zero line as everyone else interprets
33:50price using this information
33:53looking at that one zero zero level here
33:55we can see how price went back to the
33:572014
34:00January highs and July highs and cleared
34:04out those equal highs and fell short
34:06from that position all the way down to a
34:09level that was seen as a discount array
34:12in the January 2016 time period
34:15this is a weekly chart so everything
34:18that we teach in terms of PD arrays
34:20institution order flow all those things
34:23get Blended together to get optimal
34:25results and now you've entered the Inner
34:27Circle as it relates to
34:28hedging commercial activity and cot
34:32until next time I wish you good luck and
34:33good Trading

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