Items Tagged With CFTC

The new CFTC report was listed yesterday and data can be found in the usual spot, http://www.forexproject.com/Forex_Volume/

Here's a quick breakdown:

-CAD lots of additional open interest (21549), 75% of that long positions
-CHF more open interest in shorts
-GBP more short open interest
-JPY had 27645 more open interest positions, 25056 of those short
-EUR 1730 more long, 2812 short
-AUD 8625 more long this week, a decline of 1257 short 

The new Commitment of Traders report was released today and as always can be viewed at any time by going to http://www.forexproject.com/forex_volume

The positions continue to pile up on the side of the EURO.  This week there were +11,000 more long positions.  

The new Commitment of Traders report was released today. 

CAD: No major changes; Strong Long Sentiment

CHF: Open interest increases by 12,264; long position decrease -2,172; short position increase 14,486; Sentiment remains strongly short

GBP: 3,000 less long positions, 7,129 more short positions; Sentiment remains strongly short

JPY: More open interest than any currency with 110,209 open interest, with a decrease of 5,000 short positions; Sentiment remains strongly short

EUR: 3,294 more short positions; 1,055 less long positions; Sentiment remains a bit in favor of long positions

NZD: Only 5,351 open interest with 4,622 long, 611 short; Sentiment dominantly long

AUD: 8,640 less long positions, 4,090 more short positions; Sentiment remains net long

USD Index:  15,244 long positions, 3,095 short positions; USD remains net long

See the full report at  http://www.forexproject.com/Forex_Volume/

The November 2007 Futures Commission Merchant report was released today and has been processed on http://www.brokerontop.com.  Here's an updated status of the broker's I mentioned may be in trouble earlier in the week:

• CMS Forex (needed 10 million, barely compliant in October) increased excess net capital by 4%
• Hotspot FX (need 5 million, barely compliant in October) increased excess net capital by 1%
  
• Forex Club (need 10 million, seriously undercapitalized in October) increased excess net capital by 65%
• MB Trading (need 10 million, seriously undercapitalized based on October report) increased excess net capital by 168%
• Easy Forex (don't know their leverage but still seriously undercapitalized based on October report) increased excess net capital by 184%
• Alpari (need 10 million, seriously undercapitalized based on October report) increased excess net capital by 271%
  

Check out the Small-cap Brokers.

As always, visit http://www.forexproject.com/Forex_Volume to view "Forex Volume"

CAD - No significant changes, VERY BULLISH
CHF - 22,373 less short positions, VERY BEARISH
GBP - Increase of 4,081 short positions, BEARISH
JPY - Increase of 14,161 short positions, BEARISH
EUR - Increase of 3,519 short positions, MIXED to slightly BULLISH
NZD - no significant changes, BULLISH
AUD - increase of 4,899 short positions, MIXED

I've been reading more about the Commitment of Traders Report and how knowing not only non-commercial positions but commercial as well can assist in longer term trades.  For those of you that don't know what the Commitment of Traders report is, let me tell you.

Some of this information was provided with assistance from Alexander Elder's book, "Entries and Exits"

First, the report is really the only way for private traders to get an idea of the volume for each currency pair.  Each week (Wednesday), the Commodity Futures Trading Commission releases the number of open positions, short positions and long positions in a given commodity.  These positions are given for 3 groups of traders, hedgers, big traders, and small traders.   "Savvy COT analysts compare current positions to historical norms and look for situations where hedgers, or the smart money (big traders) and small traders... are dead set against each other.  If one group is heavily short while the other is heavily long, which one would you like to join?  If you find that in a certain market the smart money is overwhelmingly on one side, while the small spec are mobbing the other, it is time to use technical analysis to look for entries on the side of the hedgers."

Currently, I only provide non-commercial positions or small traders.  You can read more about how to use just this information by going to http://www.forexproject.com/forex_volume

In the upcoming weeks, I am going to start providing data and graphs for all 3 groups of traders.  I just have to put my programming hat on and find the time to do it. 

As always, the "Forex Volume" reports can be viewed at http://www.forexproject.com/Forex_Volume/

Summary:

1.  CAD increase of 8,221 long positions (Sentiment:  Very Bullish)
2.  CHF increase of 23,807 short positions (Sentiment: Extremely Bearish)
3.  GBP decrease of 11,359 short positions (Sentiment: Bearish)
4.  JPY decrease of 33,735 short positions, increase of 14,628 long (Sentiment: Bearish)
5.  USD Index had no major changes (Sentiment: Extremely Bullish)
6.  EUR increase of 8,785 long positions (Sentiment: Bullish)
7.  NZD had no major changes (Sentiment: Bullish)
8.  AUD decrease of 3,474 long positions (Sentiment: Neutral)

The quick and dirty answer to this is no.  Just ask retail traders whose monies were frozen when Refco went down.

I was reading an article in the Wall Street Journal today that brings up the fact that we as retail traders need more protection.  The CFTC or Commodity and Futures Trading Commission have a "segregation" rule which means that brokers must keep client funds separate from the firm's operating funds.  This rule only applies to U.S. traders who deposit funds for trading on-exchange futures or options on futures.  If you trade over-the-counter derivatives or off-exchange products such as FOREX, there is no rule against brokers mixing your funds in with the firms operating funds.  This is what Refco was doing.  

So the bottom line is that our money is absolutely not safe and there is nothing that says that a broker firm cannot use your deposit money to operate their business.  The unfortunate thing about all of this is that neither Congress or the CFTC have taken any steps to expand the segregation rule to FOREX traders.   

This is very disturbing and probably reason enough to only deposit what is absolutely necessary to trade.  In addition, if at any time you can withdraw money or profit, for this reason alone, you should do it.  

This article was written by FXCM's chief compliance officer so I would be very interested in knowing if FXCM follows their own rules and applies segregation to their client's funds.  I'll try to find out. 

Forex trading has become an integral part of financial transactions in any country. Companies and individuals heavily depend on forex trading to receive higher benefits. However, there has been some disturbing news on forex trading scams in the recent years. Rise is frauds and scandals have been frequent these days. To deal with the situation, a federal law called the Commodity Futures Modernization Act of 2000 was enacted in December 2000. According to the Act, the Commodity Futures Trading Commission (CFTC) has the authority to investigate and take legal action to prevent firms and individuals indulging in such scams.

The CFTC also has the jurisdiction to investigate and prosecute foreign currency fraud in its registered firms. It has issues guidelines concerning the offering and trading of foreign currency futures and options contracts. They involve the retail public. The CFTC's Advisory reaffirms that future forex trading will be properly regulated so that there won't be any rooms for any unauthorized transactions.

More Information: Read Here

In its separate Consumer Alert, the CFTC warns consumers of sales solicitations appearing in newspapers, radio or television promotions, or attractive Internet websites, touting high return, low-risk investment opportunities in foreign currency trading, and of highly paid currency-trading employment opportunities.

Open interest dropped across the board this week except in the Australian dollar.

Canadian Dollar
Big swing from NET LONG to NET SHORT

Swiss Franc
Very Bearish.  50,327 Short positions vs. 3,462 Long positions

British Pound
18,418 Short positions, 13,183 Long positions 

Japanese Yen
Decrease of 17,632 short positions.  Still Bearish 

USD Index 
Decrease of 7,196 long positions.  Still bullish with 11,114 Long positions and 4,491 Short positions 

Euro 
EURO remains Bullish with another decrease this week in Short positions (-10,149) 

New Zealand Dollar
Less Bullish than last week with decrease of 688 long positions and increase of 178 short positions 

Australian Dollar
Bearish.  Increase of 15,455 Short positions on increasing open interest. 

Crude Oil 
Less open interest than last week with an almost equal balance of long (128,840) to short (135,177) positions.