A1 Trading Company

EdgeFinder Tutorials

Take a tour of the EdgeFinder & learn how to use its unique features!
Top Setups
Smart Money Indicator
COT
aAII Investor Sentiment
Bank Forecast
Price Forecast
Put-call ratio
market summaries
seasonality
risk gauge
carry trade scanner
historical backtest
market heatmap
retail sentiment
economic calendar

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Top Setups

HOW DOES THE TOP SETUPS PAGE WORK?
Using powerful data such as COT, retail sentiment, and seasonality, the EdgeFinder's top setups page will automatically build a list of the top buys and top sells.
How we use this to trade?
Find strong setups with the click of a button! With the top buys and sells listed on one page we can quickly identify setups worth looking into!
EdgeFinder Top Setups

Video Tutorials

How to use the top setups page

Scoring Help

Learn more about the EdgeFinder's Scoring

What do the scores mean?

​The total score is the EdgeFinder's overall bias on each asset. The score currently goes from -10 to +10.

After calculating each individual fundamental and technical score, the EdgeFinder then takes the sum of all the scores.

The more negative the number is, the more bearish it is.
The higher the number is, the more bullish it is.
Click here to learn more.

Smart Money Indicator

HOW DOES THE SMART MONEY INDICATOR WORK?
The smart money indicator compares smart money & retail sentiment. It is designed to show a divergence or convergence in interest between the two parties. Ideally, traders would want to see an increase in COT net positioning and a continual decline in retail sentiment, and vice versa.
How we use this to trade?
We use this to see where those patterns are happening. In the case for EURUSD, it seems that there is growing bullish sentiment from smart money and retail. However, retail is still leaning bearish while COT is bullish. The way to tell who is bearish or bullish is by checking which values are above or below 0%. Below 0% is bearish and above 0% is bullish.

Video Tutorials

Smart Money Indicator: Compare Retail & Institutional Positioning!

Scoring Help

Learn more about the EdgeFinder's Scoring

What do the scores mean?

​The total score is the EdgeFinder's overall bias on each asset. The score currently goes from -10 to +10.

After calculating each individual fundamental and technical score, the EdgeFinder then takes the sum of all the scores.

The more negative the number is, the more bearish it is.
The higher the number is, the more bullish it is.
Click here to learn more.

COT Data

HOW DOES THE COT DATA WORK?
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 we use this to trade?
We follow the banks’ institutional trades for more long term positioning.
EdgeFinder COT

Video Tutorials

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

Scoring Help

What do the scores mean?

COT is a key way to find a positional bias in the market. When institutions take long positions over time, it can lead to higher prices later on. And the same idea applies the other way.

The EdgeFinder considers three categories in the commitment of traders report. First, it considers the overall net positioning on an asset. If net positioning is over 60% long, or over 60% short, this will result in a +1 or -1 score. Next, the EdgeFinder considers the latest change in data, from the previous weekly filing. If, in the latest filing, there was a net increase in long positions, +1, if there was a net decrease in long positions, -1. Finally, if there was a net increase in short positions, -1, and if there was a net decrease in short positions, +1. The EdgeFinder then sums up the total of these conditional statements to produce the final output.

In this section, we will compare the long and short contracts of individual assets within an index, currency pair or commodity. Here is how we calculate the score for currency pairs, gold and bitcoin:

Currency Pairs, XAUUSD, BTCUSD:
If Change in Currency A Longs % > Currency A Longs % last week, +1
If Change in Currency A Longs % < Currency A Longs % last week, -1
If Change in Currency B Longs % > Currency B Longs % last week, -1
If Change in Currency B Longs % < Currency B Longs % last week, +1
Also,
If Currency A Net Longs > Currency B Net Longs, +1
If Currency A Net Longs < Currency B Net Longs, -1

Here is how we score indices and oil:
Indices/USOil:
If +COT Long Contracts, +1
If -COT Longs Contracts, -1
If +COT Shorts, -1
If -COT Shorts, +1
Also
If COT Longs > COT Shorts, +1
If COT Longs < COT Shorts, -1

Here is how we score indices and oil:
Indices/USOil:
If +COT Long Contracts, +1
If -COT Longs Contracts, -1
If +COT Shorts, -1
If -COT Shorts, +1
Also
If COT Longs > COT Shorts, +1
If COT Longs < COT Shorts, -1

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.

Video Tutorials

Smart Money Is Taking Advantage of YOU

Scoring Help

Learn more about the EdgeFinder's Scoring

What do the scores mean?

​The total score is the EdgeFinder's overall bias on each asset. The score currently goes from -10 to +10.

After calculating each individual fundamental and technical score, the EdgeFinder then takes the sum of all the scores.

The more negative the number is, the more bearish it is.
The higher the number is, the more bullish it is.
Click here to learn more.

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 Tutorials

Bank forecast video tour

Scoring Help

What do the scores mean?

​The total score is the EdgeFinder's overall bias on each asset. The score currently goes from -10 to +10.

After calculating each individual fundamental and technical score, the EdgeFinder then takes the sum of all the scores.

The more negative the number is, the more bearish it is.
The higher the number is, the more bullish it is.

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

Video Tutorials

How to use Price Forecasts

Scoring Help

What do the scores mean?

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

Video Tutorials

How To Use the EdgeFinder's Put-Call Ratio (Powerful Market Sentiment Indicator!)

Market Summaries

HOW are THE Market summary 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.

Seasonality

HOW DOES seasonality WORK?
The Seasonality Tracker averages the last 5 and 10 years of price performance and plots these averages on a bar chart.
How we use this to trade?
Understanding how an asset has performed historically in each month of the year will give you an idea of how it may perform in the future.

Video Tutorials

How to Trade Seasonality like a PRO | Month of the Year Trends!

Scoring Help

What do the scores mean?

Daily price changes in % from January 1st - December 31st
Weekly price changes in % from January 1st - December 31st
Average monthly return for the past 5 and 10 years
Average weekly return for the past 5 and 10 years
MoM Seasonality
Average % price change for each month in the last 10 years
Plot them on a bar chart for 12 months of the year

Scoring Method:
If 10 year > 5 year > 0, +2
If 5 year > 10 year > 0, +1
If 10 year < 5 year < 0, -2
If 5 year < 10 year < 0, -1
If 10 year < 0 AND 5 year > 0, 0
If 5 year < 0 AND 10 year > 0, 0

Risk Gauge

HOW DOES THE TOP SETUPS PAGE 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.
EdgeFinder Top Setups

Video Tutorials

How to use the top setups page

Scoring Help

What do the scores mean?

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 TOP SETUPS PAGE 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.
EdgeFinder Top Setups

Video Tutorials

How to use the top setups page

Scoring Help

What do the scores mean?

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.

Video Tutorials

How to use historical backtests

Scoring Help

What do the scores mean?

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.

Video Tutorials

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

Retail Sentiment

HOW DOES retail sentiment WORK?
The retail sentiment metric displays data based on the positioning of retail traders.
How we use this to trade?
For us, this is a contrarian signal producer.
If retail traders are 60% long (or more), then this is a bearish signal. If retail traders are 40% long (or less), then this is a bullish signal.

Video Tutorials

Retail Sentiment Explained: How to Trade AGAINST the Crowd!

How To Use Retail Sentiment

Scoring Help

What do the scores mean?

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.

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.

Video Tutorials

How to use historical backtests

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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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