Market Attitudes in ContextMarket Attitudes in Context

Did you get a chuck out of those thousand-pip moves？

Remember that those were just isolated occurrences of when the COT report signaled a perfect market turnaround before we began betting the farm based on our interpretation of the COT report.

Backtesting and looking for reasons why a reversal rake place is the best thing to do.

Was the economy flourishing at the time？

Or was it the midst of a downturn？

Remember that the COT report assesses trader reaction over a set period of time.

Using the COT report as an indicator, like any other tool in your toolkit, does not necessarily correspond to market reversals.

So take the time to read over this report and get a sense of what works and what doesn't.

Before we wrap up this lesson, remember that market prices aren't just determined by COT reports, Stochastic, Fibonacci levels, and so on.

Millions of persons act in response to economic studies, fundamental reports, politics, Godzilla attacks, UFO sightings, Lady Gaga performances, and life in general to move the markets.

It's how you use these tools that will determine whether or not you're ready for what's ahead.

To sum up:

• It is our job as FX traders to determine how the market is feeling.

• The Commitment of Traders Reportis one approach to evaluate market sentiment extremes.

• We can find ourselves in better situations to fish for tops if we understand the activity of the three types of traders (commercial, non-commercial, and retail).

• Keep in mind that every market top or bottom is preceded by a sentiment extreme, but not every sentiment extreme precedes a market top or bottom.