12/4/2022

4 DECEMBER 2022

This week trades...

S&P500, we are still in a strong seasonal period and bears are nowhere to be seen yet, so it still makes no technical sense to be short just yet, with the present context I believe we overshoot the resistance level over the next couple of weeks, but I prefer to be long precious metals over stocks

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GOLD, I have a pending order to long at 1785, take profit 2060, stop loss 1720, sizing for 1.5% risk

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EURUSD, positionings continue to indicate the USD is likely to remain weak but I’m not conviced this is the next long term trend yet, with a long term horizon I prefer to be long precious metals rather than short USD

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SUMMARY

SLV still running in the long term portfolio

S&P500 still not buying dips long term

GOLD longs pending

And this is everything for this week, I’m seeing more USD selling interest from institutions but instead of going short USD I prefer to go long GOLD, I set the pending order for what I think will be a move higher that will take place over the next couple of months as the speed of monetary policy tightening slows down globally but with inflation still relatively high

Institutional Activity

US Dollar

+ 6
SHORTS

Institutions adding USD shorts (forth week)

Japanese Yen

+ 6
LONGS

Institutions adding JPY longs (second week)

How to use the smart money index

HOW TO...

Trades
besomebodyfx terminal
HOW TO USE THE SMART MONEY INDEX

Alright so let’s see how the Smart Money Index is used…

It’s very simply, but first let’s start with what this tools is for:

This system spots anomalies in the daily short sale volume across various S&P500 stocks…

Why short volume?

There is a middleman (market maker) for just about every order that is executed on the market. Lucky for us, this middleman always leaves a trail, he is forced to sell short whenever he fills a buy order.

Whenever a market maker fills an investor’s buy order, the
MM is facilitating the trade by SHORTING shares. Thus, short volume is actually representative of investor buying volume…

And this is why short volume is a strong indicator of buying activity in our case.

 

Where we take the daily short sale volume data?

https://www.finra.org/filing-reporting/trf/trf-regulation-sho-2018

http://regsho.finra.org/regsho-Index.html

 

You might be more confused than before here but let’s get to how the tool works and how we use it for building positions in the S&P500.

With the daily short sale volume data we build this index that we call “smart money index” just because these money have been buying perfectly with very small drawdown every major correction in the S&P500 so they must be smart no? 🤪

We then track the anomalies in this index which is illustrated by a value printed above 0.48x

When that value appears that means there is strong short sale volume which means…?

Which means that the market makers are selling high quantities of market shares to these “smart money”.

But enough of this and let’s exactly how we use this tool:

As already noted above the concept is extremely simple, when we get a print above 0.48x we buy the S&P500 and hold for 3 months straight…

As you can see we colour in green the cells that printed a number above 0.48x so that we can find them easier.

And before you say it… no it doesn’t reprint or overfit, once a day is closed and a value is printed that’s it, no going back…

Trust me it’s very simple, bear with me a second, this is historical data for the sake of the example:

On column A of the sheet you will find the date, on column B you will find the S&P500 daily closure so the price at which the S&P500 closed on that specific date and last but not least the Smart Money Index value in column C.

So let’s take a look at what’s happening in the image above, if you take a look at the first value at the bottom it’s December 6th 2018 (2018/12/6) and the S&P500 is trading at 2696, going ahead a few days and we see that the S&P500 is trading lower and lower everyday so it’s more or less in a bearish trend so when it’s time to finally buy the dip safely?

Well that’s the Smart Money Index job… The volume anomaly appears when the index is above 0.48x, so as soon as we get that print we open a buy position and hold for 3 months straight…

Why 3 months?

So technically here we could be holding forever, no joke! Here we could be just buy the dip when the index says to and hold until we are satisfied with the profits or just trail stop loss higher and higher (when the S&P500 starts to trend after a crash you don’t stop it easily), then usually more signals are generated while the market goes up hence more positions are opened and profits compounded…

BUT for the sake of the strategy we picked a timeframe to hold the position and then sellback so we picked 3 months because that’s the average duration of a prop trader portfolio.

Back to the example, the S&P500 is “crashing” (as the perma bears would say) until we finally get a print in the index above 0.48x in January 2nd 2019, so we open our buy and hold for three month straight and well yes that was basically the bottom, we encountered a small drawdown of 62 points but closed the trade in 357 points of profit.

Here is the visual representation:


Now let’s see some clear stats…

Yes there hasn’t been any trade in 2013, in 2014 and in 2018, why?

Because we didn’t have enough of a correction to trigger a buy signal so no position was opened.

For some this may be a bummer but hey this is an extra tool that you add on your portfolio of trades so it’s extra performance added to what you already perform with regular trading, this system didn’t generate trades in those years but we have other ways of profiting from the market too, plus don’t forget it’s an extremely “stress free” and effective system, just open the position and cash it after 3 months, don’t forget the value of the profits are relative to the amount of work you put into a position…

It’s more valuable a 40% a year made with just a few hours of work every month/week or a 100% a year made with 8 hours of work everyday?

I will take both because i’m a market junkie 🤪 but yeah you get the point…

On total 37 trades for a total of 4068 points so far, without taking into considerations the trades opened in the 2020 recent correction where the tool predicted the bottom with just 100 points of drawdown (may seem a lot but it’s nothing in 2020 crash volatility) and those positions are floating well in profit now…

Win rate? 36 winning trades and only 1 losing… (a mere -15 points)

Average win is 6 times more than the average loss (which is only one) and for us it’s very important the drawdown during a trade which on average is around -50 points which is half than the average win, those are some great stats…

So do we have a winnings system here?

As much as i would love to say YES, we can’t ever say that for certain as past performance is NEVER indicative of future results, but hey… we have something that has proven to work over the past 11 years with great risk reward and stats which give us a high chance of more profitable years ahead, and most of all it’s extremely effective to use and “stress free”, wait for the signal, deploy your position and wait 3 months to cash your profits, what else you want? I would pay gold for such a system…

Ah don’t worry you don’t need to opt in the terminal everyday to check where the index is at, we will of course notify you on Telegram every time we get a print above 0.48x

Enjoy

How to use the money flow predictor

HOW TO...

Trades
besomebodyfx terminal
HOW TO USE THE capital FLOWs TOOL

These charts are created by collecting historical movements and money flows of speculative and commercial positions.

What does it tell us?

Generally, if you are a swing trader, you can use these charts to open positions at peaks or bottoms, and to get confirmations of long term trends for your positions.

The cash flow tool can be used only for TIMING and DIRECTION, this tool is useful to know when a market tends to peak, when it tends to bottom, and when it tends to trend and in which direction, so you can’t ever rely only on this tool, you want to use it to have a further confirmation or to time your positions correctly, let me show you an example.

Let’s say on March 5 you watch the crude oil chart and you see something telling you to go long, might be technically or fundamentally or both, the capital flow tool here would save you some drawdown and would allow you to catch a better entry because it’s telling you that usually on the 5th of March, crude oil speculators and commercials tend to push price lower…

So you skip the entry and you want for a better entry the 15th of March where the cash flow toolr is telling you that speculators and commercials tend to buy Crude oil pushing price higher.

Here you can see the perfect example of how this tool would have saved you some drawdown suggesting you to wait for the 15th of March to buy Crude Oil

On August 5 you can soo how the cash flow tool announced the beginning of the GOLD uptrend that pushed GOLD from 1455 to 1555, and this tool predicted exactly the end of the move on September 5, BUT always remember that this tool is a further confirmation to your fundamental or technical bias and that it can help you to time your entries and exits, helping you catch tops, bottoms and avoid drawdowns.

So practically what this tool does?

This tool predicts, based on historical data, the flow of capitals into a specific asset, so the flows of money coming into and out of the asset, there are a plenty of of factors that can affect both trade and capital flows for a particular country, currency and asset, this tool predicts future flows based on decades of historical flows but conditions might change and external aspects can influence the flows of capital during a specific period, this is why this tool must be used as an extra confirmation to time the entries and exits and not as main decider factor for your trades.

For more active intraday traders, this tool will be less useful, but every once in a while it will allow you to catch the perfect top or bottom of the day and ride big trends, turning your short term trade into a long term swing position.

Plus it’s anyway always nice to know in what type of cycle the market is, are capitals flowing out or into the asset in this specific time of the year? are we reaching a peak or a bottom? etc…

Let’s see another real life example, you want to short NZDUSD for instance, it’s April 26th, you check the capital flows tool and you see that between April 26 and May 1 money tends to flow into the NZD pushing price higher, so you realize that it’s not safe to enter now but the best timing would be on may 1st…

Here is the outcome, and at the same time the tool is suggesting you to take profit on May 24 because a bottom could form, so you take your profits there and stop looking for longs until new conditions are met.

This is it...

This is what this tool is for, it’s a great extra confirmation and great to time perfectly entries and exits, we use it often for our trades in the network and by being part of it you are able to always be updated on the best opportunities available in the market.

How to use the institutional activity data

HOW TO...

Trades
besomebodyfx terminal
HOW TO USE THE INSTITUTIONAL ACTIVITY SCORE

This data is extremely helpful for you to get a view on what the institutions are doing in the markets, being able to see week after week their activity will give you a great edge every week.

But how can you make use of it?

Well, first of all, you can of course follow the trades shared, easy to do, very relaxing approach and you can set and forget the pending orders, the trades on the institutional activity section are based mostly on that plus of course some technical and some fundies.

But at the same time you have the freedom to use the data for your own intraweek trading, the concept here is simple, if institutions are adding for instance longs on the EUR then for that week you want to look ONLY for EUR longs, and having the smart money on your side will allow you to ride the big moves and not get trapped in the wrong direction.

But let’s see some real life examples.

EUR DATA SENT SUNDAY 10/27/2019

This is just the first example, you can clearly see how by having access to this type of data you can get a clear bias for the week ahead and be always in the right direction.

AUD DATA SENT ON SUNDAY 10/13/2019

I can go ahead with these examples for pages and pages, with these type of data you have the power of having a clear directional bias for the entire week, it’s useful for intraday trades, for swing traders, for everybody, knowking where the money are moving and in which direction is what will make you profitable over the long run.

CAD AND JPY DATA SENT SUNDAY 10/20/2019

With some common sense and some basic technical analysis, you are able to catch the best entries, the best way of doing this would be to pair a currency where institutions are moving in a specific direction against a currency where they are moving in the opposite direction, for instance in the example above you can see we sent the institutional data Sunday 10/20/2019, and there was a clear bias to long the CAD against the JPY, institutions were adding longs in the CAD while adding shorts and closing longs in the JPY, volume during the week wasn’t much but still a solid gain with a good technical entry.

We can go on and on...

I can keep sharing examples, but i think we have proved a point here, the most info you have the better odds of taking a good trade you have, knowing where institutions are moving money, having a fundamental factor backing up the direction (you can have this by reading our daily briefings in the network channel) can be your holy grail if you use it wisely.

But so what does -10/+10 etc

You will see how the institutional activity is illustrated in “scores”, between -10 and +10.

What does the score represent?

The score represents the average amount of money moved by institutions in the given currency, for example a -10 in longs means that institutions have closed a relatively big amount of positions relative to their average activity, so for instance a +3 in longs in the CAD will be a relatively average low size and thus not much impactful.

OUR TRADES...

On the same page every week you will see our trades, these are literally the easiest signals to follow, you have no excuses here, the trades are sent usually as pending order on a Sunday before the market open, you have all the time in the world to set and forget the order on a Monday, literally follow the instructions and forget about the trade until the next update on the next Sunday.

Down below you can see an example of a recent trade in AUDUSD.

Pending order set at the market open and the update is then sent the next Sunday…

The next Sunday here is the update, the order has been filled and it’s now running, the next update will be the next Sunday and so on, no action is taken during the week, this is a great way of trading for traders that don’t have time to follow the markets during the week or that want to have some freedom while trading, and this is why we use both approaches, this long term relaxing approach and a more intraweek approach in the telegram channel, you can easily follow both by being a private network member.

The good aspect of this is let’s say you got bored of trading every day and you want to go on holiday or you want to take a break, easy peasy, switch to a longer term trading style, it takes literally 1 hour on a Sunday to study the institutional activity and find trades or to follow our long term trades, 1 hour on a Sunday to be free the entire week.

How to trade the retail sentiment

About - Video

About - Video

HOW TO...

Trades
besomebodyfx terminal
HOW TO USE THE RETAIL DATA ON THE TERMINAL

The concept here is very simple, the short term sentiment signal is as the name says a short term sentiment momentum signal, so it tells us to sell when retails are buying in bunch and buy when retails are selling in bunch. 

How can you trade the retail sentment?

The first way you can trade it is by opening a position accordingly to the short term momentum and catch some pips using some simple technical analysis.

So the short term momentum works as a contrarian to what retails are doing, with retails we mean the “dumb” money of the market, so once a signal is fired that means that retail traders are committing to a specific side in bunches, as a result, yoy ONLY want to trade against them as the markets will likely push against them.

The timing is key, on the sheet you will find a “timing” section, the perfect timing is 5/-5 and 6/-6, the closer the timing is to those values the better it is. Let’s say, for the sake of argument, you missed the perfect timing because you were away from your desk, at sleep or at work etc, you log in the terminal and you see a bullish momentum in EURUSD with timing at 15, that’s way off from 5 and means the move more or less has already happened and most of the retails are already trapped. Now, you don’t want to just chase the price selling or buying at any given price. So, in these scenarios wait for a retracement to a key level (support/resistance) or wait for an oscillator to give you a buy signal, the point here is that the short term signals give you the direction to trade in a specific pair, it’s up to you to open the trade at a good technical level, all you need is some techncial basics, the short term momentum will give you that additioal edge to be profitable in the long run.

The sentiment spreadsheet tells you where retails are getting trapped and where you should focus and in what direction you should look for a trade.

Another example of a trade would be when the spreadsheet sends, for instance, a sell sentiment signal and price is approaching a strong support, that means retail traders are buying that specific pair since the spreadsheet sent a sell signal, so you don’t want to be part of the crowd buying on the support but you might actually look to trade a break and a stop hunt through the support.

Beware here, the short term sentiment is NOT for swing trades, it’s for intraday scalpers looking to take some quick 10-15 pips on the market…

The medium term signals...

First, what are the medium term signals?

This section is the medium term signals, they are more significant and they trigger once various conditions are metthis is one of the most powerful signals since it signals usually a begining of a medium term movedepending on the average daily range it can last for +100 pips or more,  the key here is to match this up with some of your technicalsdon’t just follow blindly the suggestions but use your skills to catch good entries with good risk rewards. 

There can be some false signals here so make sure you keep an eye on it once it triggers, the spreadsheet is resetted every new day so the next day the signal will disappear but it remains valid until retails current longs remain below 55 for BUY signals and above 45 for SELL signals.

THE BUBBLE CHART...

The bubble chart is an MUST HAVE tool for intraday traders, the use is very simple, it works in 2 zones, the bottom left rectangle is the buying zone, if a currency is in that zone then it’s a good buy, on the opposite the top right rectangle is the selling zone, any currency in that zone is a good sell, always use some technicals to time the entries, this tool is just an extra confirmation to your trades.

The bubble chart is resetted every day before the European open, so every day you get fresh new sentiment from the chart.

But what does it actually show?

The chart is giving you a visual representation of fresh retail action, the further a currency is on the bottom left the more retails are selling, so giving that we take a contrarian approach to the “dumb” money you only want to BUY that currency, at the same time the further a currency is at the top right of the chart the more retails are buying it and so we only want to SELL it.

The rest is just mixed so don’t bother with currencies in the top left zone and bottom right zone.

But so what this chart does for me?

It gives you the BEST pairs to trade every single day! So you can have that edge to make some profitable scalps.

So you will see how every morning before the European open the chart will reset itself to the middle line, and the currency will then start slowly moving in the buying or selling zone as the live retail positions get opened in the market.

This is a great tool to help you get fresh market sentiment visually and to get the best pair to trade and the direction to take every single day, the furthest currency in the bottom left is the best buy and the furthest currency in the top right is the best sell, for instance you log into the terminal and you see…

The CAD is the best BUY at the moment while NZD is the best SELL, making NZDCAD the best SELL of the market, that’s the pair you should focus on for the day, don’t get distracted by to many things, focus on 1 or 2 pairs for your intraday, that’s it.

Further confirmation...

We need to get further in-depth with the intraday trading so that you can have the most edges possible for your trades, here comes the average daily range and the Daily confirmation as further confirmation.

First of all you want the Daily Confirmation to be in line with the signal and your direction…

You absolutely want this on your side, green is giving you the confirmation to buy and red gives you the confirmation to sell, so if you get a signal to BUY you want the “sentiment semafor” to be GREEN if it’s RED you should skip the trade, and viceversa for a SELL signal you want the “sentiment semafor” to be RED.

The last confirmation is the average daily range, it is useful for you to set take profits and stop losses, but it’s also very useful to see if there is more juice in the pair to move or not, so let’s say we get a short term signal to sell EURUSD and it has a daily average of 60 pips, and price has already moved 80 pips since the beginning of the day, well you can clearly see that it’s not wise to follow the trade suggestion since price is exceeding the daily average, so this is one thing to keep in mind in your daily trading.

FOR THE LONG TERM TRADERS...

Below the bubble chart you will see some data that is more for medium-long term traders, that data is showing behavior of retail traders during the week and the month on specific assets, what needs to be looked at here is the commitment in certain directions, so we want the data to show a clean trendline showing us how retails are gradually committing into a specific direction, so that we can trade against them.

This tool is more of a “overall” outlook of what the retail traders are doing in the market, it’s interesting to use it to find currencies where they are committed to one specific side…

So for instance if retails started the month at 90% longs in AUD and the week after they are at 80% and after a few days since the beginning of they week they are at 60%, that shows us that they are closing their longs and adding to shorts, hence something is making retails close their longs and adding to shorts, so what we want to do? trade against them 😉, if they add to short we add to longs and viceversa.

Ok i know i know...

Your might be confused now, but this is why we are here, by being part of the private network we will suggest you the BEST trading opportunities every time we see one, all of these retail data will start to make sense after months of using it, don’t expect to start learning the retail behaviors in a few days, you will need to watch the data and the charts for a long time before you will metabolize how everything works, how retails get trapped, how and where they add positions, where they get stop hunted and more…

From now on you have no excuses, you clearly know where the retails are stuck, if you fall into the market traps again then it’s better if you close your broker account, this tool will not only be useful for your personal trading but if you follow a signal provider for instance you can filter some of his “bad” signals by seeing if the “dumb” money are buying or selling.

And just as a side note, the average retail trader is wrong 80% of the time, this means that every now and then they will be right, so don’t expect the markets to always go against them, 20% of the time they will be right, use the other 80% at your advantage.

Please note the spreadsheet is fully automatic and does not require any input from yourself, but it’s wise to refresh the page here and there to make sure you are up to date.