If you have read Larry Williams’ Secrets of the CoT Report, you would know how this simple yet effective tool can be used to get into the right side of the trades.
In his book, Larry gives a detailed overview along with supporting charts and mentions the different ways you could trade the financial markets using the CoT report. Published every Friday by the CFTC, you can read more about the CoT report here.
Having read this book, I have been fascinated by the methods taught by Larry Williams for trading using CoT and discovered a perfect CoT indicator suite for MT4. While there are many more services out there (and having tried most of them), I find the CoT Indicator suite for MT4 to be perfect. Let me know point out some short comings with most other CoT indicator tools.
- Most CoT Indicators are either coded for TradeStation or other expensive trading platforms. For the average trader, these trading platforms are out of reach.
- The few CoT Indicator websites that I did find charge a monthly recurring subscription fee. Although the fee is low, paying monthly can be tedious and also these services require some manual work, such as having to update the latest COT report files and so on.
- The COT data by itself is time consuming to format it into a readable table and most often you need to have consistent records (years of data)
Commitment of Traders Indicator Suite for MT4
The CoT Indicator suite is a perfect application with a one time fee of $29.95 and consists of some key indicators that are mentioned by Larry Williams.
The basic set of indicators you get include:
- COT Graph
- COT Histogram
- COT Index
- COT Open Interest
- COT Total
Before we go over the details for each of these indicators that make up the COT Indicator Suite for MT4, there are a few things to bear in mind:
The Cot Indicator for MT4 is customizable to the point that you can choose to see all data (Comm., Non-Comm. Non-Reportables) or choose to individually view them. You can also change the instrument and add the indicators to different charts. Ex: For EURUSD, you could choose either EUR or USD, or add the same indicator twice but for each of the instruments.
COT Graph: This indicator displays the difference between net long and net short. This chart can be configured to be viewed as percentage between 0 and 100 and plots the middle line (at 50). A move above the middle line indicates the group has increased their net long positions and vice versa. This indicator works the same way as an oscillator, indicating over-bought and over-sold levels.
COT Histogram: This indicator displays the report of a single category or group as a histogram. The green candles in the histo shows an increase in net long while red candles indicate an increase in net short. There is also the option to use a moving average and this indicator acts similar to the MACD.
COT Index: The COT Index indicator is perhaps the most outstanding concept developed by Larry Williams and Steve Briese. This indicator can be used to find the extreme peaks and bottoms. As mentioned in the books, this indicator can be used for market timing.
The Cot Index is plotted on a 0 – 100 graph. When the Cot Index is at 0, it infers that a net short position is at the extreme, while the 100 level marks the net long at extremes.
CoT Open Interest: The open interest indicator shows the level of interest in the currency or instrument. This indicator can be used to see the # of contracts that are still opened (not settled). When a category increases their Open interest it signals the continuation of the trend.
CoT Total: The COT Total displays the total long, represented by Green candles and short positions represented by red candles for a specified category. There is also a ‘Yellow Line‘ which shows the net difference between the total longs and shorts and can be used to monitor the rate of change.
Installing the COT Indicator Suite
Installation of the COT indicator is very simple and you can choose all or just one of your MetaTrader terminal where the data should be installed. Once installation is complete, you would be prompted to enter the activation key after which the indicator is ready to be used.
Updating the COT Data: The most amazing part of this tool is that updating COT data is as simple as clicking a button. You simply select the year and the update happens automatically for all the chosen instruments. You can run the update every weekend so as to update your charts with the latest data released on Friday.
COT Indicator Suite for MT4
For just $29,95 this is perhaps the best tool you could invest. Used by the institutions, the COT Indicator is cheap compared to many other indicators that claim to make you rich. All you need is to have a good understanding of reading the COT Report. It would be worthwhile to also purchase a copy of Larry Williams’ Secrets of the COT Report as it would be good to reference the book in conjunction with this indicator.
This concludes the first series in this topic about Commitment of Traders. In the following article, i’ll write more about who the COT Indicator is ideal for and how to make the best use of the COT Indicator for MT4 in order to find out what the institutions are doing.