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I've tried adding indicators to MRCI data, without luck. Hopefully you'll do better than me, though.
The data that MRCI provides can be a good start for a trading system. I don't use it 100% as presented, and after a number of years I am quite happy with the results (except for this year, when the drought caused havoc).
Can you help answer these questions from other members on NexusFi?
After looking at MRCI's suggested trades I eliminate 90% of them. Too short time frame. Not consistent results. Commodity that I don't trade. Bad fundamentals this year. Poor suggestion.
Plus if I am selling options based on that suggested MRCI trade I will have far more winners because I am far out of the money. They are doing ATM futures.
I use the futures only DCOT. I feel it gives me better direction than if you include options. I compile the data into a large spreadsheet and compare the week to week changes in the data. I keep track of what the futures closed at on the Tuesday of the report. These things are then charted together.
I mainly look at what the Managed Money is doing. If you see a strong futures move and the managed money is adding longs week after week, then I am confidently selling puts.
Like this summer. Managed money was buying Soybean futures like crazy. I sold puts.
I generally look at what the commercials are doing for they are what the real market is. I have not sold puts using that info but I am inclined to incorporate that info in my decisions.
Other thing I want to try is to look at the P n F charts to see the price action??
So basically your strategy is to determine where the larger, managed money cash flows are heading (via Commitment of Traders report?) and then sell options opposite of that?
As I said earlier, the DCOT is down on the priority list. It's fundamentals far ahead of the rest. Followed by seasonals, general economic conditions, DCOT, in that order.
How do you determine if someone is
1. buying a call because he thinks the market is going up or
2. buying a call for risk protection because he sold a future?
They have totally different sentiments but did the same thing in options.
