Seasonal COT Signals

Andy Waldock’s COT Signals program is a discretionary commodity trading strategy. It distills a complex, proprietary analysis of the Commitments of Traders report into a user-friendly worksheet that helps you determine when to buy, sell, or stay out of investments in the futures markets and their commodity-based ETF counterparts.

The Seasonal COT Signals program generally focuses on trades lasting less than 30 days and takes into account seasonality of market swings.

It’s different from other analyses in a few, critically important ways:

  • Most seasonal analysis provides you with an entry date (“a”), an exit date (“b”), and the historical performance of the market from a to b. This provides zero accountability for any trading strategy as the risk-to-reward ratio is completely ignored. Our seasonal analysis takes into account the very real-world scenario of marked-to-market losses.

Take this example: A crude oil contract requires $3,500 in margin, but has an average daily range of more than $750 and an expected holding time of 20 days. One can quickly see the potential for a forced margin call due to underestimating the market’s volatility and contract size. In week one, you might have been knocked out of the trade due to a margin call, but by week two, it reverses in its predicted direction. In this case, the trade might close profitably based on the analysis, but there was no practical concern for risk versus reward.

  • Every seasonal trade we publish comes with a protective stop. More importantly, the protective stop calculation is included in our preliminary risk assessment email. You’ll know what you’re risking and what the out-of-sample historical returns have been, so you can determine how the trade may fit your investment objectives.
  • Our seasonal analysis looks at winning percentages, consistency of returns, risk-to-reward ratio, and many other metrics to determine whether it’s worth risking our capital. (Yes, I do mean our capital. I trade these as well. We’re in this together.)
  • Our seasonal calculations come from a survey of calculation methods plus our proprietary model. We use them to develop a behavioral pool, which we then subject to further analytics.
  • Finally, because our trade requirements are quite stringent, the number of trades can vary anywhere from one, to five, or more in any given month. We can never predict entirely which trades we’ll be taking until the time comes to pass. Since we use current market filters, our information is very real-time.

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Seasonal Trading Disclaimer

Seasonal tendencies are a composite of some of the most consistent commodity futures seasonals that have occurred in the past several years. There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year even if a seasonal tendency occurs in the futures, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results. No representation is being made that any account has in the past, or will in the futures, achieve profits using these recommendations. No representation is being made that price patterns will recur in the future.

Hypothetical Performance Disclaimer

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under or over-compensated for the impact if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight.

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