A1 Trading Company

EdgeFinder 101

Take a tour of the EdgeFinder & learn how to use its unique features!
Top Setups
COT Data
retail Positioning
seasonality
Trend
GDP Growth
mPMI & sPMI
Retail Sales
Inflation (CPI)
Employment Change
Unemployment Claims
Interest Rates
Smart Money Indicator
aAII Investor Sentiment
Bank Forecast
Price Forecast
Put-call ratio
Data Scanners
risk gauge
carry trade scanner
historical backtest
market heatmap
economic calendar

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Top Setups (Score Output)

HOW DOES THE TOP SETUPS PAGE WORK?
The Top Setups algorithm uses a combination of economic data, technical readings, and sentiment readings to produce a bias for each symbol that it tracks.

The EdgeFinder calculates score for each individual metric, then determines a final score by combining all individual metric scores. This final score is then considered when generating a 'bias' for each symbol.
HOW CAN TRADERS USE THIS?
With the help of the Top Setups page, traders can see the EdgeFinder's current bullish/bearish/neutral readings. Traders can then consider these readings when looking for trading opportunities.

Note: the top setups generated by the EdgeFinder are not timeframe specific, but rather a collective directional bias derived from all considered data.

How is Total Score Calculated on the EdgeFinder?

Learn more about the EdgeFinder's Scoring

Total Score Calculation

The Top Setups page showcases the total calculated scores of all metrics considered by the EdgeFinder, for each symbol that it tracks. The "Score" tab is the finalized sum of all columns/scored metrics.

The EdgeFinder's bias on a symbol is "Bullish" if the total score is greater or equal to +5, and "Very Bullish" if the total score is greater or equal to +9.

The EdgeFinder's bias on a symbol is "Bearish" if the total score is less than or equal to -5, and "Very Bearish" if the total score is less than or equal to -9.

Video Tutorial

COT Data

What is COT data?
With the COT data you can see where the biggest money flows are entering and exiting. This page will automatically generate the top bought and top sold positions by institutions.

While the net positioning (top table) is useful, it is more of a long term indicator, as it changes very gradually.

The bottom table however showcases the latest week-to-week filing from large speculators, including their latest buys and sells. This table is far more useful in our view for active traders, as it shows the latest money flows in or out of a security.

The EdgeFinder's scoring algorithm considers both the net positioning data as well as the weekly filing data, but puts more score weighting to their latest buys and sells.
How can traders use this data?
By tracking institutional money flow week to week, we can get a sense for what large market players are positioning for in the markets. 

By observing their latest buys and sells, there can be confirmation to our own trading ideas.
EdgeFinder COT

How does the EdgeFinder score COT data in its scoring system?

Learn more about the EdgeFinder's Scoring

Why we use Non-Commercial / Large Speculator Data

HOW IS THE COT DATA CALCULATED?
The non-commercial commitment of traders data is an excellent way for traders to track what large speculators in the market are buying or selling. The EdgeFinder assigns a more bullish reading to assets that large speculators taking a bullish position in, and a more bearish reading to assets that large speculators are taking a bearish position in.

EdgeFinder COT Data Scoring (Currency Pairs)

LOGIC FOR CURRENCY PAIRS:
The EdgeFinder's score for COT data in regards to currency pairs considers the latest institutional buying or selling that took place in each respective currency, according to the latest report.

First, the EdgeFinder will automatically calculate (and showcase) the weekly % change in institutional positioning.

To get this value, the EdgeFinder finds the difference between the currencies previous week's net long % and the currencies latest net long %. (Long% current - Long% Previous)

The easiest way to demonstrate this is through an example. Let's assume we are looking at 'EURUSD'. For our example, 'EUR' is currency A, and 'USD' is currency B.

First, we will consider currency A. If the EdgeFinder detects a positive value in week over week % change for currency A, the COT score for the currency pair is increased by +1. If weekly % change is negative, the COT score for the currency pair is decreased by 1 (-1).

Then, we consider currency B, the EdgeFinder repeats this process, but inverts the score impact due to this being the counter to the base currency (currency A). So, if the EdgeFinder detects a positive value in week over week change for currency B, the COT score for the currency pair is decreased by 1 (-1). If it is negative, the COT score for the currency pair is increased by +1.

EdgeFinder COT Data Scoring (Indices/Commodities/Crypto)

LOGIC FOR INDICES, COMMODITIES, CRYPTO AND METALS :
For scoring non currency pairs, the EdgeFinder considers the latest COT reported change in institutional buying/selling, as well as the overall net average positioning for each asset.

Let's do an example to showcase how this calculation works. For our example, let's say we are considering the EdgeFinder's COT score on gold.

Part 1: latest change in buying/selling
First, the EdgeFinder will automatically calculate (and showcase) the weekly % change in institutional positioning.

To get this value, the EdgeFinder finds the difference between the asset's previous week's net long % and the asset's latest net long %. (Long% current - Long% Previous)

If the weekly % change is a positive value, that indicates that on a net basis, the EdgeFinder detects institutional bullishness. If this weekly % change is a negative value, that would suggest bearishness.

If the net weekly % change is positive, the EdgeFinder increases the asset's COT data score by +1. If negative, it decreases the asset's COT data score by 1 (-1).

Part 2: Net positioning
The net position column within the EdgeFinder's COT data page showcases the current total (long-short contracts) positions overall in a particular asset.

If the net position calculation is positive, long positions outweigh short positions, and we would say net positioning is bullish. If this number is negative, short positions outweigh long positions, and we would say net positioning is bearish.

If net positioning is bullish, the asset's COT score is increased by +1. If net positioning is bearish, the asset's COT score is decreased by 1 (-1).

Part 3: Summation!
Finally, the EdgeFinder takes the summed up total of part 1 and part 2 to create a final COT score, that will range from -2 to +2. This is then factored in to the EdgeFinder's total output score automatically.

How We Calculate Net % Change

COT NET % CHANGE CALCULATION
To calculate the net % change value,

First, the EdgeFinder calculates the current percentage of long contracts relative to total open contracts. We call this the current long % value.

The calculation for current long % value is as follows:
(current # long contracts / (current # long + current # short contracts))

Then, the EdgeFinder calculates the previous week's long % value.

The calculation for previous week's long % value is as follows:
(previous week's # long contracts / (previous week's # long contracts + previous week's # short contracts))

Finally, to calculate the net % change value, the calculation is:
(current week's long % - previous week's long %)

Example:
If last week the net long % was 55%, and the current week is 57%, that would result in a net % change of 2%. By using the net long %, we account for the change in both long and short contracts week over week.

Video Tutorial

How To Use COT Data
How to Trade the COT Report like a PRO | Commitment of Traders Report

Retail Positioning

What is Retail positioning?
The retail positioning table showcases the latest open positions data on each symbol. We track retail positioning for every symbol available in the EdgeFinder (except for US10Y bonds)
HOW CAN TRADERS USE THIS data?
We use retail positioning as a potential contrarian signal. If retail positioning is heavily long (60% or greater) we consider this a potentially bearish signal. If retail positioning is heavily short (60% or greater) we consider this a potentially bullish signal.

How the EdgeFinder Scores Retail Positioning Sentiment

RETAIL POSITIONING EXPLAINED:

Retail Positioning Calculation

Retail sentiment is the measurement of the overall long/short positions on a pair, commodity or index. Historically, the crowd is rarely correct picking direction. They will usually try to trade a reversal or catch a big swing against strong trends. Although this type of trading can work, it is not often that they are accurate. Sometimes, retail is too early, too late, and even flat out wrong. With that said, the EdgeFinder uses an inverse score to which way the crowd is trading.

The EdgeFinder considers retail positioning a contrarian signal if positioning is above 60% long, or below 40% short. Meaning; if retail positioning is greater or equal to 60% long, the EdgeFinder will produce a -1 score for retail positioning. If retail positioning is below or equal to 40% short, the EdgeFinder will produce a +1 score for retail positioning.

Here is how we score retail sentiment:
The retail sentiment metric displays data based on the positioning of retail traders. For us, this is a contrarian signal producer.

If retail traders are 60% long (or more), then this is a bearish signal (-1). If retail traders are 40% long (or less), then this is a bullish signal (+1).
So the overall, score for retail can only go from -1 to +1.

Video Tutorial

Seasonality

WHAT IS SEASONALITY?
The Seasonality (Monthly) chart showcases the 5 year & 10 year historical month to month performance of each symbol.

If a particular symbol shows a +1.00% average gain in June, that would indicate that in the last 10 years, the average performance is a gain of 1% from the beginning of the month until the end of the month.
HOW CAN TRADERS USE THIS data?
When reviewing historical performance, it is important to remember that past performance is not a guarantee of future performance. However, understanding how an asset typically performs historically can be useful in a trader's analysis.
For example, if the price of EURUSD tends to fall by 1% in March over the past 5 and 10 years, a trader could factor in this historical pattern to their analysis for possible setups.

Image 1: Seasonality (Monthly) on DXY

Image 2: Seasonality (Weekly) on EURUSD

Image 3: Seasonality Scanner

How is the EdgeFinder's Seasonality Score Calculated?

Learn more about the EdgeFinder's Scoring

Seasonality Calculation for Indices & Commodities

For indices and commodities, the EdgeFinder assigns a seasonality score of either -2 or +2.

If the current month's 10 year historical average performance is positive, the EdgeFinder assigns a +2 to the seasonality score. If the current month's 10 year historical average performance is negative, the EdgeFinder assigns a -2 to the seasonality score.

The reason this seasonality score weighting value is higher than for currency pairs, is that seasonal tendencies are very pronounced in indices & commodities. 

This score is then factored in to the total score produced by the EdgeFinder.  

Seasonality Calculation for Currency Pairs

For currency pairs, the EdgeFinder assigns a seasonality score of either -1 or +1.

If the current month's 10 year historical average performance is positive, the EdgeFinder assigns a +1 to the seasonality score. If the current month's 10 year historical average performance is negative, the EdgeFinder assigns a -1 to the seasonality score.

Seasonality Video Tutorial

Video Tutorials

How to use the seasonality
How to trade seasonality like a pro

Trend

What is edgefinder's trend reading?
The trend projections tool offers traders a view into technical analysis by comparing the price of an asset to its relative moving averages. In this case, we use the 5, 8 and 21 exponential moving averages to see how strong the trend is.
How can traders use this data?
Traders can use trend analysis to spot when an asset is moving strongly enough in one direction to indicate that it will likely continue to move in that direction. Day and Swing Traders can use this tool as it marks short term moves projected out to 3 weeks.

How is Trend Calculated on the EdgeFinder?

Learn more about the EdgeFinder's Scoring

Trend Calculation

In order to find a strong trend correlation, the EdgeFinder compares the 5, 8 and 21 simple moving averages and where they are compared to each other. The formula looks like this:
To define trend reading, we use the daily chart, and 3 exponential moving averages: the 5 day EMA, 8 day EMA, and 21 day EMA
W = 5 day EMA
X = 8 day EMA
Y = 21 day EMA
Here is our calculation for trend, in the backend:
=if(and(W2>X2,X2>Y2),2,
if(and(W2<=X2,X2>Y2),1,
if(and(W2=X2,X2=X2,X2

This means that if the 5 day exponential moving average is a greater value than the 8 day, AND the 8 day is greater than the 21 day, we can conclude the uptrend is strong (+2 score). To the downside, the 5 day must be less than the 8 day which must be less than the 21 day (-2 score).

A +1 score will show if the above happens EXCEPT the 5 day is less than the 8 day. A -1 score will show if the above happens EXCEPT the 5 day is greater than the 8 day.

GDP Growth

What is GDP Growth?
The GDP growth scanner offers a visual representation of GDP growth among major economies globally.
A higher GDP growth reflects a stronger and more robust economy, while a lower GDP growth reflects a weaker economy.
The statistics shown are the most recent data pulled in by our software.
How can traders use this data?
By understanding GDP growth, traders and investors can consider which economies globally are growing the fastest, or which are lagging behind. 

This information can be used to find markets that are poised for potential outperformance or outsized growth.

How does the EdgeFinder score GDP in its scoring system?

Learn more about the EdgeFinder's Scoring

EdgeFinder GDP Score Calculation (Indices)

For scoring indices, the EdgeFinder considers the latest produced GDP figures relative to the forecasted value.

In reference to the stock market, strong GDP prints can suggest growth, and in turn can help to boost corporate earnings.

If the latest figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for the associated stock market index/indices.

If the latest figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bearish (-1) for the associated stock market index/indices.

For example, if US GDP comes out higher than expected, this would be considered bullish for the Nasdaq, DOW Jones, S&P500, and Russell 2000 and each would receive a +1 in the "GDP" column of the EdgeFinder's total scoring system.

EdgeFinder GDP Score Calculation (Gold)

For scoring gold, the EdgeFinder considers the latest produced GDP figures relative to the forecasted value.

In reference to gold, strong GDP prints can suggest growth and prosperity - which makes gold look less attractive. Gold is traditionally considered a safe haven, in which investors will flock to in times of uncertainty.

If the latest US GDP figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bearish (+1) for gold.

If the latest US GDP figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for gold.

EdgeFinder GDP Score Calculation (Industrial Commodities)

For scoring industrial commodities (copper, silver, platinum, oil), the EdgeFinder considers the latest produced GDP figures relative to the forecasted value.

In reference to industrial commodities, strong GDP prints can suggest growth, and in turn can help to boost demand for raw materials.

If the latest figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for industrial commodities.

If the latest figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bearish (-1) for industrial commodities.

ISM Manufacturing & Services PMI

What is PMI?
The Purchasing Managers Index (PMI) is a key forward looking indicator of an economy. The indicator is derived from the surveyed responses from purchasing managers across the country.

Within the survey, purchasing managers are asked about the current business conditions they are facing, and their plans to hire/purchase/etc. The aggregated responses are then indexed as a number between 0 and 100. Anything above 50 suggests overall expansion in the economy while anything below indicates a contraction.

The ISM manufacturing index (mPMI) represents the manufacturing sector, while the ISM services index (sPMI) represents the services sector. Within the EdgeFinder, we display each of these indicators, as they are each important independent measurements of an economy.

A positive change in PMI suggests growth, or slower decline. So, if PMI in either category come in higher, it is considered optimistic for an economy.

How is Manufacturing & Services PMI Calculated on the EdgeFinder?

Learn more about the EdgeFinder's Scoring

Manufacturing & Services PMI Score Calculation

The EdgeFinder considers the change from previous data to latest data in mPMI & sPMI. If positive growth, bullish for currency & stock market, bearish for gold, bullish for commodities and crypto. If negative growth, all signals are reversed. For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.

Retail Sales

What is retail sales?
Retail sales tracks consumer demand for finished goods by measuring the purchases of durable and non-durable goods over a defined period of time.

We use this information to gauge the strength or weakness of the consumer, which is a vital signal of an economy's health. If consumers are spending, business and growth will most likely be positive.

How is Retail Sales Calculated on the EdgeFinder?

Learn more about the EdgeFinder's Scoring

Retail Sales Score Calculation

The EdgeFinder considers the the latest retail sales data, relative to the forecasted number. If the latest retail sales data is stronger than forecasted, we consider this bullish (+1) for currency & the stock market, bearish (-1) for gold, bullish (+1) for commodities and crypto. If retail sales come in lower than forecasted, all previously explained signals are reversed.

For currency pairs, both respective economies are considered, leading to the possibility of a range from -2 to +2 in score for this category.

Inflation (CPI)

What is CPI?
Consumer Price Index (CPI) and Core CPI are primary measures of inflation central banks use to make monetary policy decisions. Rising or falling Inflation impacts some assets differently than others. The EdgeFinder is calibrated to reflect how traditional economic theory would suggest an asset may be impacted by the latest figures.

Consumer Price Index (CPI) is the metric we use to measure the rising or falling inflation for each major economy. The EdgeFinder imports and compares the latest data relative to forecasts & previous data in order to generate its scoring.
Change:
Recent change in CPI will affect score in a certain type of way depending on the asset. For instance, a rise in CPI would be a bearish indicator for the indices because it might influence the Fed to raise interest rates. However, seeing this same sort of news would be bullish for the dollar, since higher interest rates usually lead to a stronger USD.
Location:
Not only does the change in inflation matter, but also what the nominal inflation rate is currently. For example, CPI readings being above 3% is traditionally considered a high inflation environment, while CPI readings being below 2% are considered low inflation environments. This "environment" or location is also considered in our scoring.

How is Inflation Calculated on the EdgeFinder?

Learn more about the EdgeFinder's Scoring

Inflation Score Calculation For Currency Pairs

For currency pairs, we consider the latest reported CPI reading relative to what analyst forecasts were prior to the reported figure.

Because a currency pair involves two unique economies, the software analyzes each currency individually, and computes a total score for the pairing.

For example, for EURUSD, we consider both the Euro, and the US dollar when scoring this pair's inflation reading.

For the equation below, currency A would refer to 'EUR', while currency B would refer to 'USD'.

Calculation:
If currency A's latest CPI is HIGHER than forecasted, +1
If currency A's latest CPI is LOWER than forecasted, -1
If currency A's latest CPI is EQUAL to forecasts, +0

We repeat for currency B, but invert the impact on the currency pair
If currency B's latest CPI is HIGHER than forecasted, -1
If currency B's latest CPI is LOWER than forecasted, +1
If currency B's latest CPI is EQUAL to forecasts, +0

Inflation Calculation for Gold

For gold, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. However, unlike currency pairs - in the computation for gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest US CPI is HIGHER than forecasted, -1
If latest US CPI is LOWER than forecasted, +1
If latest US CPI is EQUAL to forecasts, +0

If latest US Core CPI is HIGHER than forecasted, -1
If latest US Core CPI is LOWER than forecasted, -1
If latest US Core CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest US CPI < 1%, +1
If 1% <= latest US CPI >3%, 0
If latest US CPI > 3%, +1

The final score is the summation of both component 1 and component 2.

Note, the EdgeFinder considers a high inflation environment to be bullish for gold as a baseline. However, if inflation is ticking up in the most recent data alongside strong economic output data, it could suggest that the US central bank may act to take a restrictive monetary policy stance. Strong economic data accompanied with elevated inflation can be bullish for the dollar, and headwind to gold. Specific to the inflation calculation, the EdgeFinder assumes gold to be most bullish when inflation is hot but cooling, or during severe recessionary periods. The EdgeFinder considers gold to be most bearish when inflation is under control.

Calculation for Indices & BTCUSD

For indices & BTC, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. Similar to gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest CPI is HIGHER than forecasted, -1
If latest CPI is LOWER than forecasted, +1
If latest CPI is EQUAL to forecasts, +0

(US indices only)
If latest US Core CPI is HIGHER than forecasted, -1
If latest US Core CPI is LOWER than forecasted, +1
If latest US Core CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest CPI <= 3%, +1
If latest CPI > 3%, -1

The final score is the summation of both component 1 and component 2.

Note, the EdgeFinder typically views inflation to be the least threatening to these risk on assets when it is tamed and under control. Whenever inflation becomes too high or too low, it is considered by the EdgeFinder to be a potential bearish catalyst. If inflation is too high, monetary policy could become more restrictive and harmful to businesses. On the other end of things, if inflation enters a dangerously low level, it suggests that the economy is quite weak and could hurt corporate earnings and risk sentiment.

Calculation for Commodities (US Oil, Silver, Copper, Platinum)

For commodities, the EdgeFinder will consider both the location and latest change to CPI when computing a final score for inflation. However, unlike currency pairs - in the computation for gold, we also consider CORE CPI for our latest change, as illustrated in the image and calculation below.

Component 1: (Change)
If latest CPI is HIGHER than forecasted, -1
If latest CPI is LOWER than forecasted, +1
If latest CPI is EQUAL to forecasts, +0

Component 2: (Location)
If latest US CPI < 1%, -1
If latest US CPI >= 1%, +1

The EdgeFinder assumes that higher inflation is considered a more bullish environment for commodities. This is because higher inflation means rising prices, and is often accompanied with higher demand for raw materials due to strong economic output. If however economic output data is found to be weak, that will be accounted for in the EdgeFinder's total score, and may act to counterbalance this inflation reading.

Employment Change

What is the Non-farm Payroll (NFp)?
Among these labor market data, NFP may be the most important metric in the dollar’s strength or weakness. NFP, or Non-Farm Payroll, shows how many jobs were added or lost during the span of a given month. Higher NFP typically suggests economic strength which coincides with dollar and indices strength. It is also a major economic indicator that the Fed uses in measuring economic strength and monetary policy.

How is Employment Change Calculated on the EdgeFinder?

Learn more about the EdgeFinder's Scoring

EdgeFinder Employment Change Score Calculation (Indices)

For scoring indices, the EdgeFinder considers the latest produced employment change figures relative to the forecasted value.

In reference to the stock market, strong jobs growth prints can suggest a healthy economy. Strong jobs data indicates that the consumer may continue to borrow and spend money, stimulating the economy.

If the latest figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for the associated stock market index/indices.

If the latest figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bearish (-1) for the associated stock market index/indices.

For example, if US employment change comes out higher than expected, this would be considered bullish for the Nasdaq, DOW Jones, S&P500, and Russell 2000 and each would receive a +1 in the "Employment Change" column of the EdgeFinder's total scoring system.

EdgeFinder Employment Change Score Calculation (Gold)

For scoring gold, the EdgeFinder considers the latest produced employment change figures relative to the forecasted value.

In reference to gold, strong jobs growth prints can suggest a healthy economy. Strong jobs data indicates that the consumer may continue to borrow and spend money, stimulating the economy. A strong economy gives investors confidence, and gold appears less attractive as an alternative investment / risk off safe haven. In contrast, weak jobs data may make gold appear more attractive as a safe haven alternative.

If the latest US figure is higher than what was forecasted, the EdgeFinder's scoring system considers this bearish (-1) for gold.

If the latest figure is lower than what was forecasted, the EdgeFinder's scoring system considers this bullish (+1) for gold.

EdgeFinder Employment Change Score Calculation (Currencies)

Under Maintenance

Unemployment Claims

The unemployment rate is the number of actively searching unemployed persons expressed as a percentage of the labor force. A higher percentage usually causes weakness in the dollar and US indices.
What is the unemployment rate?

Interest Rate

What is the interest Rate Scanner?
The interest rate scanner offers a visual representation of interest rates among major economies globally.

A higher interest rate is usually viewed as a bullish indicator for a currency, where a lower interest rate is often considered bearish. Higher interest rates tend to attract foreign investment, increasing the demand for and value of the home country's currency.

How is Interest Rate Calculated on the EdgeFinder?

Learn more about the EdgeFinder's Scoring

Interest Rate Scoring Concept

The interest rate breakdown is designed to measure changes in the 2-year yield in the US and forecasts from central banks.
1:
Take the 7 day moving average of the US02Y (2-year treasury yield)

Interest Rate Scoring for Indices, XAUUSD, USOIL, & BTCUSD

If price is above the moving average, -1
If price is below the moving average, +1
In this example, the interest rate forecast for the GBP is unchanged. This means that UK100 will receive a 0 score for interest rate.

If the forecast happened to be higher than current rates, UK100 would get a -1. And if the forecast was below current rates, the index would receive a +1.

Interest Rate Scoring for Currency Pairs

Concept: Uses current and next quarter’s forecasted interest rate for both currencies (Data from the Central Bank Forecast Page)

Currency A
If forecast > current, +1
If forecast < current, -1
If forecast = current, 0
Currency B
If forecast > current, -1
If forecast < current, +1
If forecast = current, 0
In this case, the forecast rate is higher than the current rate. So the NZD would get a +1 score.

Smart Money Indicator

What is the smart money indicator?
The smart money indicator displays retail trader positioning and non commercial positioning, as presented in the commitment of traders report.  
HOW CAN TRADERS USE THIS DATA?
This tool is designed to help traders spot potential divergences or convergences in positioning when examining both "smart money" and retail positioning. 

Smart Money Indicator

AAII Investor Sentiment

WHAT IS THE AAII INVESTOR SENTIMENT?
The American Association of Individual Investors (AAII) surveys a number of individual investors and asks where they think the market will go in the next 6 months. This survey is taken every 7 days to accumulate weekly data and history of the overall individual bias in the market. The survey ends and is updated by Wednesday at 11:59 p.m.
How we use this to trade?
Within each vertical bar, there are three segments. In order of stacking from the bottom, the values read as bullish, neutral and bearish. The yellow line crossing through the bar chart is the bull-to-bear spread. A positive spread means that the overall sentiment is leaning bullish. And a negative spread indicates bearishness in overall sentiment.

Bank Forecast

HOW DOES THE bank Forecast WORK?
See what large scale institutions are forecasting on your favorite assets! With the EdgeFinder's bank forecasts tab, users can see relevant forecasts on their favorite assets posted by each firm's research teams! 
How we use this to trade?
Bank forecasts can add confluence to our trading ideas! We use this information to form a stronger bias on the assets we are looking to trade.
Bank forecasts edgefinder

Video Tutorial

Price Forecast

HOW do THE Price forecasts WORK?
The price forecast feature displays short term projections for each asset, based on the trend reading metric, and standard deviation.
How we use this to trade?
Swing traders will be able to get an idea of how to trade a pair, commodity or index by simply looking at this chart.
EdgeFinder Price forecast

How to use Price Forecasts

Price Forecast Calculation

The price forecast feature displays short-term projections for each asset, based on the trend reading metric, and standard deviation. Please note, these are general projections and may adjust as time passes or trends change.

To define trend reading, we use the daily chart and 3 exponential moving averages: the 5-day EMA, 8-day EMA, and 21-day EMA
W = 5 day EMA
X = 8 day EMA
Y = 21 day EMA
Here is our calculation for the trend, in the backend:
=if(and(W2>X2,X2>Y2),2,
if(and(W2<=X2,X2>Y2),1,
if(and(W2=X2,X2=X2,X2

Put-Call Ratio

HOW DOES THE Put-call ratio WORK?
The put/call ratio is a measure of investor sentiment in the options market. The measurement is proportional to the total amount of calls and puts purchased in a given time period. For this indicator, we’re viewing how many contracts are being purchased each day. If there are a larger number of puts than calls in the market, sentiment is cautious and/or risk averse. If there are a larger number of calls than puts, sentiment could be viewed as bullish.

The higher the reading, the more puts to calls are present. So, a low percentage is usually a good sign that investors are optimistic in the equities options market.
How we use this to trade?
Higher value: Bearish Sentiment
Lower value: Bullish Sentiment
Puts = bearish bets
Calls = bullish bets

How To Use The Put-Call Ratio

Data Scanners

HOW are THE Data Scanners pages?
Take a deeper dive into each asset individually to understand its strength or weakness. On an asset's score breakdown page you can view the currencies' COT data, retail sentiment, seasonality, trend reading, GDP growth, inflation, unemployment, and interest rates all in one place.

Risk Gauge

HOW DOES THE risk gauge WORK?
The risk gauge is a simple meter that will incorporate short and long term metrics to form a current bias. Here you can see the current reading and previous readings that compares today's percentage to the previous day's percentage at market close. The gauge is designed as a stacked chart to show what the current risk reading is compared to yesterday's reading. All percentages are displayed as positive values to either the fear or greed side
How we use this to trade?
In investment terms, fear and risk-off are synonyms; just how greed and risk-on are as well. When several areas of the market are fearful, we are likely in or about to be in an environment where risk-off assets thrive. Oppositely, a greedy environment would indicate optimism in risk-on assets. One way to tell if we are in a true risk-on or off market is to watch the change on the meter. Seeing a continued increase in the amount of fear or greed will help determine what kind of environment we are in, and we can figure out how to trade in it.

Risk Gauge Calculation

The Risk Gauge Meter combines the price action of various risk-on/off assets and measures risk sentiment of the overall market. The score goes from -6 (strong risk-off reading) to +6 (strong risk-on reading).

The assets used are a combination of indices, commodities, and 10-year bond yields (VIX, SPX500, Gold, US10Y, DXY, JXY).
This metric is good for indicating which assets are going to be bullish or bearish. For example, if the risk meter is at -4, it suggests that USD, CHF and JPY could be bullish. If the risk meter is at +4, it suggests that AUD, CAD, NZD, GBP, EUR, XAUUSD, SPX500, could be bullish. 

The bias output is scored this way:
-2 to +2 = neutral
-3 to -4 /+3 to +4 = “risk-off”/”risk-on”
-5 to -6 / +5 to +6 = “heavy risk-off/ heavy risk-on”

Carry Trade Scanner

HOW DOES THE carry trade scanner WORK?
The table shows several different currency pairs. In order to calculate the swap rate, it takes the base currency rate minus the quote currency rate to get the interest rate divergence. The positive carry direction is telling you which direction you would have to trade in order to collect a positive swap. For instance if the base minus quote is positive, you would need to buy in order to get paid interest. If the difference between base and quote is negative, you would need to short in order to get paid interest.
How we use this to trade?
This metric is good for finding which pairs will pay positive swap rates. If you’re looking to take a carry trade, this table will show you which pairs to long or short in order to collect a swap. So why would traders want to see this? Some traders may look to avoid paying swaps so they’ll make sure they don’t hold a pair through the swap. Others might just want to collect interest though the carry trade regardless of price action because of their tolerance to potential lower moves.

Carry trade scanner calculation

For example, the table above shows a list of currencies. If you were to buy and hold USDJPY through the swap, you would collect interest. However, if you were to short and hold USDJPY through the swap, you would pay interest. The pairs marked in blue will tell you which pairs you should buy to collect a positive swap, and the pairs in red show you which to short if you want to collect a swap.

The dollar carries a 5.5% interest, while the quote currency, JPY carries a negative interest rate. To calculate the approximate interest you would earn on each swap, we simply take the difference of the base rate minus the quote rate. In this case, We will subtract -0.10% from 5.50%. It will look something like this:

[(5.5 - (-0.10)] = 5.60%

This means you will collect around 5.6% for holding this pair to the long side during each swap.

Historical Backtest

HOW DOES THE historical backtest WORK?
The Historical Backtest Scanner plots an asset’s price performance with the EdgeFinder’s score. You can see the score of the EdgeFinder change each day while price changes.
How we use this to trade?
This tool plots the market open and close price on top of the asset’s score. This is helpful for traders to see how an asset would have performed relative to its score every day. It is helpful in spotting changes in momentum, a continuation of trends, and signs of a weakening or strengthening market.

How to use historical backtests

Historical Backtest Calculation

Here is an example on the SPX500. As you can see, price was moving higher at the same time the EdgeFinder's sentiment was at a strong bullish reading of +7. However, as price begain to show sings of bullish weakness, the scanner downgraded its score from a +7 to a +6. And eventually, the score reached as low as -3.

The EdgeFinder has the ability to adapt to market conditions based off a series of fundamental and technical data. The first sign of weakness in score led to over two weeks of selling on this index.

Market Heat Map

HOW DOES THE market heatmap WORK?
The Market Heatmap page shows you a quick summary on the day of what is up and what is down.
How we use this to trade?
The Market Heatmap is a great solution for traders looking to trade with volatility.

This forex market heat map shows you the top movers every day!

Economic Calendar

HOW DOES THE economic calendar WORK?
The economic news page lists upcoming news events that may affect the markets. Users can filter the news events by currency, time until the event, and the impact.
How we use this to trade?
News events can have a major impact in how the markets move. We use this information to decide how to manage our trades to avoid any major swings that may negatively affect our trades.

Top Setups

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The EdgeFinder's Top Setups page allows traders to quickly see the best setups based on sentiment, technical, and economic data!

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COT Data

EDGEFINDER 101
See what big money is trading with the EdgeFinder's COT data!
EdgeFinder COT

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Retail Positioning

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Retail sentiment is helpful to traders as it provides valuable insights into the behavior and sentiment of individual investors, often serving as a contrarian signal that traders can use to gauge potential market reversals or momentum shifts.

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Seasonality

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Seasonality is essential for traders to consider as it provides valuable insights into recurring patterns and trends within markets, enabling them to anticipate potential price movements and make informed trading decisions.

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GDP Growth

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The EdgeFinder's GDP growth scanner visually depicts the economic health of major global economies, providing traders with the most recent statistics to discern potential market outperformance.

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PMI

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PMI, sourced from nationwide surveys of managers, offers traders insights into economic trends and allows them to analyze its influence on commodities, indices, and currencies.

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Retail Sales

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Retail sales is a measure of consumer demand for goods that offers traders insights into the health of the economy.

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CPI (Inflation)

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Consumer Price Index (CPI) is the metric we use to measure the rising or falling inflation for each major economy. The EdgeFinder imports and compares the latest data relative to forecasts & previous data in order to generate its scoring.

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Employment Change

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Non-Farm Payroll (NFP) data is a pivotal metric that influences the strength or weakness of the dollar and labor market dynamics.

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Unemployment Rate

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The unemployment rate is the number of actively searching unemployed persons expressed as a percentage of the labor force. A higher percentage usually causes weakness in the dollar and US indices.

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Interest Rate

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Interest rates are crucial to traders as they directly influence currency values and market dynamics, shaping investment decisions and trading strategies.

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Smart Money Indicator

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The Smart Money Indicator allows traders to easily compare retail & institutional positioning!

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AAII Investor Sentiment

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The AAII Investor Sentiment survey provides traders with valuable insights into the overall market sentiment, enabling them to gauge the prevailing bullish or bearish bias among individual investors and make informed trading decisions.

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Bank Forecast

EDGEFINDER 101
Bank forecasts are vital for traders as they provide insights into future market trends, helping to anticipate potential price movements and make informed trading decisions based on expert analysis and projections.
Bank forecasts edgefinder

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Price Forecast

Edgefinder 101
The price forecast feature displays short term projections for each asset, based on the trend reading metric, and standard deviation.

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Risk Gauge

EDGEFINDER 101
The EdgeFinder's Risk Gauge is a powerful tool that combines short and long-term metrics to provide traders with a current bias, offering insights into market sentiment and guiding trading decisions based on fear and greed dynamics.

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Carry Trade Scanner

Edgefinder 101
The carry trade presents a valuable opportunity for traders to profit from interest rate differentials between currencies by borrowing in low-interest rate currencies and investing in higher-yielding ones.

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Historical Backtest

EDGEFINDER 101
The Historical Backtest Scanner shows how an asset's price performance aligns with the changing score of the EdgeFinder each day.

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Market Heat Map

Edgefinder 101
A market heatmap provides traders with a visual representation of asset performance, enabling quick identification of trends, correlations, and potential trading opportunities across multiple instruments.

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There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
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