Oh, and a random observation: Look at how the small traders don't ever really assume a large net position like the large traders. Now, my first guess is that is because the small traders aren't taking many longer term positions, and mainly day trade. But also, I think that smaller traders don't do as good of a job getting into and staying with trends, and that also shows here. If you're a ten lot trader, maybe try to use one of those lots to try and go with big trends (after simulating extensively, of course).
The following user says Thank You to ValueFocused for this post:
I remember a long time ago as a new industrial salesman with a small company. I had a customer who wanted a price on a product to be valid 3 months from now if he gave us a purchase order now for a delivery 3 months months from now. It was a time when the US/CAD exchange rate wandered all over the place so I doubted we could do that...but when I broached the subject with my boss...he said that it was no problem if the order was given within 5 days...then he bought a futures contract based on the current exchange rate to protect himself...I thought that was pretty neat at the time....gave me another arrow in my sales quiver
It's very simple: because commercial traders can sell only if hedger will agree to buy at that particular price, if the hedgers will want to buy at lower prices they'll move their buy limits lower & commercials will have to sell lower - and that's why the price will move down. The same works in opposite directions. Pure market!