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For traders interested in understanding market dynamics, the COT report can be an invaluable asset, guiding market analysis and helping refine trading strategies. The Commitment of Traders report hascontinued to evolve and actually contains the legacy COT which traders are mostfamiliar with as well as a disaggregated COT. The COT provides anoverview of what the key market participants think and helps determine thelikelihood of a trend continuing or coming to an end. If commercial andnon-commercial long positions are both growing, for example, that is a bullishsignal for the price of the underlying commodity. Information that is included in the report is compiled on Tuesday and verified on Wednesday before being released every Friday.

The COT report is available for all actively traded Futures contracts such is stock indices, interest rates, and currencies. Non-commercial traders, on the other hand, are often speculators reacting to price changes rather than underlying market fundamentals. Observing the contrast between commercial and non-commercial positions can give traders a sense of where the “smart money” (commercial traders) is moving and how speculative traders might impact short-term price movements. Commercial traders often have deeper knowledge of the markets they trade, as they interact directly with the supply and demand forces driving price movements. When commercial traders increase their long positions, it may indicate that they expect prices to rise, while an increase in short positions might signal an expectation of falling prices. However, it’s important to note that sentiment indicators are not definitive buy or sell signals.

Traders hold positions equal

A large net short position by speculators might not be bearish if there’s strong positive economic news. Forex traders may use currency derivatives COT reports to find large net long or net short positions. The COT provides an overview of what the key market participants think and helps determine the likelihood of a trend continuing or coming to an end. If commercial and non-commercial long positions are both growing, for example, that is a bullish signal for the price of the underlying commodity. Forex trading is a zero-sum game, for every winner, there has to be a loser. Retail traders are at a disadvantage with the amount of information we have in the markets.

1. You should only trade in these products if you fully understand the risks involved and can afford to incur losses.
2. By examining instances where COT data, combined with other analyses, led to accurate trades, traders can refine their own COT integration strategies and potentially avoid common pitfalls.
3. The Legacy Report classifies all traders in commercial, non-commercial traders and non-reportable traders.
4. This COT report gives more insights on the Commercials and Non-commercial Traders.
5. One theory is that “small speculators” are generally wrong and that the best position is contrary to the net non-reportable position.

When graphically shown on charts, you actually see what is referred to as the Net Traders Positions which is the actual difference between the number of long positions held by each group minus the number of short positions. Thus a positive number means they hold more long positions than short and vice versa. The CFTC then corrects and verifies the data for release by Friday afternoon. The Barchart site’s data is then updated, after the official CFTC release. The long and short open interest shown as “Nonreportable Positions” is derived by subtracting total long and short “Reportable Positions” from the total open interest. Accordingly, for “Nonreportable Positions,” the number of traders involved and the commercial/non-commercial classification of each trader are unknown.

Reports Dated December 17, 2024 – Current Disaggregated Reports:

Likewise, short-call and long-put open interest are converted to short futures-equivalent open interest. For example, a trader holding a long put position of 500 contracts with a delta factor of 0.50 is considered to be holding a short futures-equivalent position of 250 contracts. A trader’s long and short futures-equivalent positions are added to the trader’s long and short futures positions to give “combined-long” and “combined-short” positions. The COT report can help traders adopt a more patient, long-term approach by focusing on underlying market trends. By reviewing the positions of commercial traders, who are often slower to adjust to commitment of traders report forex market fluctuations but more aligned with economic fundamentals, traders can develop a strategy that captures the broader market direction. Traders can examine historical COT data to observe patterns and establish baseline readings for specific markets.

That Measures Market Extremes

Long Noncommercial Positioning represents the long open interest of noncommercial traders. Currency pairs can linger at extreme levels for prolonged durations, and a reversal might not manifest immediately. For instance, if a currency pair historically reverses when buying reaches 75%, observing the same level of long positions suggests the pair is at an extreme, warranting vigilance for signs of a reversal. Determining extremes can be difficultbecause the net long and short positions are not all relevant. Retail traders typically invest instocks, bonds, options, and futures, and they have minimal to no access toIPOs. Most trades are made in round lots (100 shares), but retailtraders can trade any number of shares at a time.

Market sentiment encapsulates the collective emotional stance of traders engaged in a specific currency pair, thereby serving as a barometer for potential price fluctuations. Many speculative traders use the Commitments of Traders report to help them decide whether or not to take a long or short position. One theory is that “small speculators” are generally wrong and that the best position is contrary to the net non-reportable position. Another theory is that commercial traders understand their market the best and taking their position has a better chance of profit (which is pretty much the same thing as the “small speculators” being wrong). Because the COT measures the net long andshort positions taken by speculative traders and commercial traders, it is agreat resource to gauge how heavily these market players are positioned in themarket. Because the COT measures the net long and short positions taken by speculative traders and commercial traders, it is a great resource to gauge how heavily these market players are positioned in the market.

Extract data from COT using Excel

1. This is meant to provide a clearer picture of what the people with skin in the game—the users of the actuals—think about the market versus the people with profit motivations or speculators.
2. The market will be in a weakened bullish set-up “if” the two-week trend in the large trader position is down, or in other words, if the funds are in the process of liquidating their net long position.
3. That’s nothing evil, just something to keep in mind on deeper COT analysis.
4. Due to legal restraints (CEA Section 8 data and confidential business practices), the CFTC does not publish information on how individual traders are classified in the COT reports.
5. The COT report’s results can be used as a tool to give traders a better understanding of the psychology of the marketplace, the net position of the commercials in the market, and the net position of the large traders.
6. The comparison of the net positions is giving us the first understanding of the overall situation.

Hence, trading strategies should integrate COT data with other market analysis tools (technical indicators, fundamental data). The Commodity Futures Trading Commission (CFTC) sets specific thresholds for reporting positions. These thresholds vary depending on the commodity being traded and are designed to capture the activity of the major players in the market. These are like minimum requirements for a trader’s holdings to be included in the Commitments of Traders report.

The computed amount of spreading is calculated as the number of offsetting futures in different calendar months or offsetting futures and options in the same or different calendar months. Any residual long or short position is reported in the long or short column. Open interest represents unsettled contracts, reflecting ongoing market positions. For instance, in a scenario where the AUD/USD pair exhibits an upward trend, monitoring open interest in Australian dollar futures offers supplementary perspective. Rising open interest amid price upticks suggests the trend’s likely continuity, while stabilization or decline in open interest hints at a potential trend reversal.

The Legacy Report classifies all traders in commercial, non-commercial traders and non-reportable traders. MarketBulls provides you the graphical and tabular real time and historical Commitments of Traders Legacy Report for each asset above. COT reports are based on position data supplied by reporting firms (FCMs, clearing members, foreign brokers, and exchanges). While the position data is supplied by reporting firms, the actual trader category or classification is based on the predominant business purpose self-reported by traders on the CFTC. Furthermore, the COT long format reports show the percent of open interest held by (i) the largest four and (ii) the largest eight reportable traders, without regard to whether they are classified as commercial or non-commercial.