Hi Marquelle,

The green differential is the difference between the two things being compared to help visualise the comparison better. We use it for COTA, IR Diff and GDP diff.

For example, on the COTA a positive differential is a net long positioning on the currency pair, and a negative differential is a net short positioning etc...

Taking GBPUSD in this example, the green line would read as:

1) The majority of hedge funds are long the pair GBPUSD

2) The number of hedge funds long is decreasing compared to last week (peaked)

Now it's important to note that using the green line alone can be misleading in the integrity of the above conclusion. Why? Because you may notice the dashed line (representing USD) and the solid line (GBP) are both positive.

This reduces the conviction on the GBPUSD long bias, as ideally you'd want GBP cot values positive and increasing, whilst USD cot value to be negative and decreasing.

And it's also worth mentioning that all other fundamental indicators point to a GBPUSD short, but generally, this will only happen once the hedge funds enter their short position i.e. COTA diff becomes negative!

Key points:

- Green line differential helps investors visualise the relationship between two currencies

- Always double-check the dashed and blue lines to benchmark your convictions

Hope that helps and makes sense!