Category: (Book)
28 new, starting at $24.99
13 used, starting at $23.96
"The way that Big Money got to be Big Money was by also being the
'Smart Money', and so it is worth paying attention to how the Big
Money traders behave. That's the essence of what Larry Williams has
to teach us in this book. And it's not just what the Smart Money
says or thinks, but how they behave in terms of their trading that
we should pay attention to. Larry shows us how to listen to that
message."
—Tom McClellan Editor of The McClellan Market Report
"Finally, an insider's take on what really goes on behind the
scenes in commodity trading. Larry writes his view of trading, as
only he knows it, from his twenty-five years of
experience."
—James Altucher author of Trade Like a Hedge Fund
Successful trader Larry Williams reveals industry secrets that help investors and traders successfully invest and trade side-by-side with the largest commercial interests in the world. You'll be introduced to the COT (Commitment of Traders) report, the best resource for achieving trading success, learn exactly what the information it contains means, and plan for maximizing profits by acting on reported actions.
an Insider's look in the futures marketReviewed by Maria D. Georga, 2009-03-03
Larry Williams has been a pionner in informing the world about what the real pros of the futures markets.This book is also unique in giving the wolrd the COT report ,a rear look to the hedgers view of the market and not plain guessing.
Groundbreaking workReviewed by Alex Spiroglou (Cross Asset Strategy), 2007-12-03
(i).Thesis / Book Purpose
"I heard Goldman's was selling bonds the other day.... ",
"General Mills has a massive long futures position..."
We have all heard stories like that, usually when the market has
been coming off some impressive rally or decline. However most of
the times as the market turned the opposite direction, such
statements proved to be equally short lived.
Nevertheless is there really a way of knowing what the "Big Boys"
are doing on a collective basis ?
Welcome to Larry William's "Trading Stocks & Futures with the
Insiders", the first (and only) book ever written on the subject of
analysing commercial trader positions using the Commitment of
Traders (CoT) data provided by the CFTC. The book's sole purpose it
to get you in investment alignment with the largest participants in
each futures and option market. It is an alternate way of viewing
the fundamentals by tracking the footprints of the largest market
participants' view of each underlying market.
(i) Organizational Structure:
The organizational structure of the book is not that apparent at a
first glance, but the chapters can be roughly rearranged and
"pigeonholed" in four different thematic categories as
follows:
1. The Market Participants from a CoT point of view
Chapters 1 & 3 are about the commercials, an intro to their
motives, mistakes and what to look for.
A thorough description of the CoT report contents as provided by
the CFTC is given in chapter 2.
This is probably a chapter for those with the intellectual
curiosity to know how the CoT data is gathered in its final format.
Chapters 5 & 6 describe the operations of the Small and Large
Traders categories (from a CoT point of view) respectively.
2. CoT Analysis
Chapter 4 is the first attempt to "quantify" commercial activity
through the CoT Index (first introduced by Curtis Arnold). Chapter
10 features how to view the commercials vs all the market alongside
other accumulation / distribution activity. Larry then goes to
construct some custom (price-based, non CoT) indicators and then
uses them in conjunction with seasonality. During the last part of
the chapter, the EMH is "attacked" with some simple systems /
tests. Chapter 11 presents a synthetic CoT index, however the
specifics are not disclosed. Chapter 13 features another version of
the CoT index, examples of how to use a simple CoT system that
combines CoT data with a trend-following filter. Additionally,
another intermarket system for Gold using the US Dollar is combined
with seasonality. Lastly chapter 15 shows an example of CoT
analysis on the bond market.
3. Volume & Open Interest
In Chapters 7 - 9, Larry deals with one of the most misunderstood
aspects of technical analysis. Properties of volume and open
interest (OI). Larry exposes myths and explains how these interact
and how they can be used in context of the strategy. In chapter 9
Larry expands in the topic of OI, by taking a more thorough view
that provides insight into OI quality.
4. Issues general about Trading
Chapter 12 is about stop importance and geared towards the novice.
Discussions on preframing, and mental preparation, a sample long
term exit strategy, entry & exit strategy adjustments according
to the nature of the trend, bad trading habits. Chapter 14 is aimed
at highlighting the use and abuse of technical analysis and the
ineffectiveness of tools such as Fibonacci, candlesticks, chart
patterns and formations.
(ii) Audience & Style of writing:
The book is the first on the subject of commitment of traders data
analysis. Thus the largest part of the book's audience is by and
large "beginners". Either literally or professionals uninitiated to
CoT analysis. Larry however has managed to accommodate both
audiences, by keeping on one hand the strategies and style of
writing geared towards the less quantitatively inclined beginners,
but providing enough ideas / hints for the seasoned professionals
to work upon and to expand research methodologies.
Since CoT data are weekly, and analysis is mainly geared towards
big picture views, consequently the book is not recommended towards
day-traders / short-term traders. Additionally among the
medium/long term community, the ones with a contrarian slant will
find themselves in line with the philosophy exposed. Although the
material is primarily used by futures/option traders, stock
investors may also be utilise CoT data either directly (through
Larry's advisory service) or indirectly (focusing on sectors that
exhibit a high degree of correlation to underlying commodities). So
although CoT is not suited for individual stock picking, it could
prove to be very useful for identifying sectors (which according to
academic studies explain 60% of a stock's performance). Therefore
criticisms that the Larry has not included much stock-specific
analysis may be true, but fail to see past the obvious.
As far as style is concerned most of the work is aimed primarily
towards discretionary (or quant-guided traders at best), not
completely systematic ones. However there are examples of such
attempts.
The book is easy to follow, non-technical and mostly narrative.
Larry manages to keep reader interest by using analogies from life
to trading (how fishing in Montana is similar to trading, p.80) the
common aspects of driving and trading (p.123) and the common
mentality shared by trapeze artists and trading (p.123). The
"emotional" qualities of writing are apparent in the use of humour
and wit.
(iii) Main Points / Bottom Line:
Trying to distil the author's words of wisdom conveyed in the book
in a few points would be:
1. Markets carry an enormous amount of randomness, but are not
totally unpredictable.
2. Focus on the "big picture" and the fundamentals.
3. A way to follow the fundamentals is through CoT analysis, and by
focusing at the extreme readings of commercial activity in
particular (among other CoT tool readings).
4. Technical Analysis on its own is not productive, thus it is
advisable to follow the forces that "move" the charts. A lot of
Technical Analysis tools are of little use.
5. CoT analysis is not a market timing tool. It is a "big picture"
technique.
6. No methodology is perfect, and the same applies to CoT research.
Thus best results are obtained if CoT analysis is used in
conjunction with other tools, such as cycles, seasonality,
technical triggers, etc.
(iv) Degree of analytical exposure :
After reading the book, one of the most obvious conclusions is that
Larry is a stern master in CoT analysis and an authority in the
field. A lot of the ideas he exposes are just an exhibition of how
much work needs to done in this particular area of research.
All of the examples are simple in computational intensity (as the
author is the first to admit), but serve as an "idea generation
platform" to those that wish to look past the obvious. Those that
are looking for "easy answers" (exact system rules) or "math
intensive" illustrations, are missing the point that Larry
makes.
The CoT data can be used in either standalone format (chapter 4),
or as model components. The illustrations are simple but
illustrative of the possibilities. A simple trend-following
application for high probability setups (page 150- 153), CoT used
in conjunction with intermarket analysis (p.154), seasonality (page
156), custom indicators, sentiment. Although the examples provided
are simple in nature and not suitable for stand-alone use, they do
provide a useful illustration of the effectiveness of this analysis
technique and the importance of looking past purely price-based,
trend-following methodologies.
The examples provided to make the aforementioned points are mostly
chart based.
Quantification of the data is in the form of normalised indicators
(such as the CoT index, in chapter 4), oscillators (to study open
interest activity in chapter 8), trading systems / setups that
provide threshold actionable overbought/oversold levels, ratio
smoothings (chapter 13).
Hypothetical trade performance statistics are reported in the form
of dollars gained on a per contract basis. Precise entry and exit
rules are not provided since the main point is to highlight the
magnitude of the trends that can be spawned by CoT "signals",
rather than actual trades / positions. CoT analysis (as the author
repeatedly states) is not a precise market timing tool.
However, although examples are drawn from all asset classes, it
would be more beneficial to the reader if there was a more
extensive market coverage, even in the form of an appendix
providing visual / chart based evidence for strategies. Another
omission, is that although the author does point out that the
methodology is not perfect he does not provide in depth causation
for commercial signal failure, how to identify and deal with it.
These issues are dealt in his advisory service.
(v) Comparative Evaluation
Since the book is the first of its kind (solely devoted to CoT
analysis) it is not possible to do a comparative evaluation, as it
would not serve justice to authors that have devoted a few chapters
on the issue.
(vi) Possibilities for development
It this writer's view that the there is considerable scope of
further research for CoT analysis (several ideas already being in
investigation progress), and applied as part of a Decision Support
System or integrated into a more systematic structure (there are
already some papers on the subject from the academic community).
Like all pioneering manuscripts, this book sets the foundations and
fundamentals tools upon which further research will be done. A
fundamentally robust technique, which means that it is able to
sustain market environment changes (regime shifts).
If you would like additional information,
please refer to the conversation/ interview I had with Larry
on the subject of Commitment of Traders Analysis and Trading
Alex Spiroglou
Thinking of swing trading?Reviewed by K. MacDonald, 2007-08-31
This is a good book to understand the participants in the market and how they behave. The charts tended to be small and hazy which made it difficult to see each weeks information discretely. I would recommend this book to someone that is green to the market to illustrate the importance of trading with the trend and as importantly, with the largest participants in the market. Worth a read.
Review of Commitment of Traders ReportReviewed by James Sogi, 2007-02-18
I am glad to consider Larry Williams as a friend, so it is was with
great enjoyment that I read his recent book. One of the great
pleasures and benefits of knowing the Specs is being able to meet
and discuss market ideas with the best.
The commitments of traders report provides good additional
information to speculators in the futures markets. Larry presents
many good ideas for quantitative specs to test, and even hints at
some of the many tricks he has up his sleeve, without giving away
the family jewels. The book's use of charts is aimed at the less
quantitatively inclined beginner, and while some of the chart-based
reasoning suffers from chartism's typical retrospective bias, Larry
does have a chapter on quantitative tests, although limited to
win/loss ratios and amount of wins, and briefly discusses down days
in S&P. However, any astute spec can test the many good ideas
rigorously and develop his own more precise methods.
Ideas for new trades can come from any source, as the Specs have
shown us, and new ideas are necessary to keep an edge in a
competitive market. Rather than try to find entries base on
comparing chartpoints and indicators which is non predictive,
better to use the ideas and data to refine the entries. It is in
this spirit that the book is helpful to a speculator. It's a fun an
quick read, in Larry's breezy and folksy style.
In many ways the most basic and important call in the market is if
it is going up or down. Seems so deceptively simple, but the paths
it takes throw one off the track. Good information, just a bit more
than the next guy, is what it takes to head in the right direction,
and the COT report may give an edge.
I give the book 5 Stars.
Good BookReviewed by Tomas Jelinek, 2007-01-15
Larry gives good insight into COT report. It will open you your
eyes, because you will know why the price change. With COT you will
know what the big guys are doing and that is very important for
trading.
There insn't much stuff for stock, almost all is dedicated for
commodities...
