How Can Traders Use the Commitment of Traders COT Report for Market Analysis?

The Position Data is based on reports by different firms, like clearing members commitment of traders forex and brokers. The COT classification/ category of each firm is based on the major business purpose. This business purpose is specified by the firm itself and is checked by the CFTC on veracity.

By understanding which types of traders (such as commercials, speculators. etc.) hold large long or short positions, the traders reports can provide clues about potential future market movements. The category called « dealer/intermediary, » for instance, represents sell-side participants. Typically, these are dealers and intermediaries that earn commissions on selling financial products, capturing bid/offer spreads and otherwise accommodating clients. The remaining three categories (« asset manager/institutional; » « leveraged funds; » and « other reportables ») represent the buy-side participants. These are essentially clients of the sell-side participants who use the markets to invest, hedge, manage risk, speculate or change the term structure or duration of their assets.

Commitment of Traders (COT) Report

The number “non-reportable” positions are derived from subtracting the number of large spec and commercial positions from the total open interest. Speculators are not able to deliver on contracts and have no need for the underlying commodity or instrument, but buy or sell with the intention of closing their “sell” or “buy” position at a profit, before the contract becomes due. The information on market-bulls.com is provided for general information purposes only. Market-bulls.com does not accept responsibility for any loss or damage arising from reliance on the site’s content. Users should seek independent advice and information before making financial decisions. Open interest is the total of all futures and/or option contracts entered into and not yet offset by a transaction.

Each Friday, the CFTC (US Commodity Futures Trading Commission) reports the COT (Commitment of Traders) report. In this article, we will discuss what COT reports are and how to read them correctly. There is also more interactive version to display data, such as barchart.com. The original version of the COT reports can be found on the CFTC website.

1. Although the cautious market mood helps XAU/USD hold its ground, growing expectations for a less-dovish Fed policy outlook caps the pair’s upside.
2. These are all factors that have an impact on asset managers to remain bullish in EUR/USD.
3. The COT Open Interest is the total position that entered the market in a specific time.
4. By understanding which types of traders (such as commercials, speculators. etc.) hold large long or short positions, the traders reports can provide clues about potential future market movements.
5. These are institutional investors, including pension funds, endowments, insurance companies, mutual funds and those portfolio/investment managers whose clients are predominantly institutional.
6. That gives a much clearer view on the overall positioning in that market.

About the COT Reports

In most of these markets the majority of the open interest in these « speculator » positions are held by traders whose positions are large enough to meet reporting requirements. To use the COT report & charts for your own trading, you must analyze the net positioning of the different market participants as well as the long and short extremes on a specific period (36 or 6 months). For deeper insights you can use our free Cot index, which puts the net positions in perspective to the extremes of the period. A correct cot analysis can make you a participant for a long-term trend which is already in progress or is just evolving with a market reversal. The Commercial Traders Classification contains the Hedgers of the markets. All positions of a trader that is listed by the CFTC is categorized as a commercial traders position when the holding purpose is hedging.

In this article, we’ll explore the COT report, discuss its components, and explain how traders can use this information to gain insights into market trends and sentiment. Global market trends can be predicted even more accurately by looking at the positions of big players, such as those presented via the COT Report Commercials. Thanks to this information, traders can respond to emerging movements on time. The CFTC requires large speculators and commercial traders, or hedgers, to report their net positions twice each month.

An increasing net long position by commercials in a grain contract might suggest they’re entering positions to get future supplies, potentially foreshadowing rising financial asset prices. The supplemental report is the one that outlines 13 specific agricultural commodity contracts. This report shows a breakdown of open interest positions in three different categories. These categories include non-commercial, commercial, and index traders. For the “producer/merchant/processor/user” category, open interest is reported only by long or short positions.

EUR Commitments of Traders Data (COT)

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1. For example, commercial traders usually follow market trends for protection against price risks, while non-commercial traders often aim to profit by taking speculative positions.
2. It’s absolutely essential that all the explanations provided above are adjusted to the circumstances of events (dynamics) present in the market.
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4. The Commitment of Traders (COT) report is a summary of the holdings of market participants, published weekly by the Commodity Futures Trading Commission (CFTC).
5. Small Speculators – private investors and retail traders don’t have to report their positions to CFTC.
6. If commercial and non-commercial long positions are both growing, for example, that is a bullish signal for the price of the underlying commodity.

Analyze changes over time

The Supplemental COT Report is specialized on agriculture commodity assets. The report classifies the different market participants into Commercial, Non-commercial and Index Traders. The COT report categorizes traders into groups like commercials (hedgers) and non-commercials (speculators). One should not get hung up on individual categories and focus on net positions (long minus short positions) for each group. A large net long position by non-commercials suggests a bullish bias, while a large net short position might indicate a bearish outlook.

The COT Public Reporting Environment (PRE) provides an application programming interface (API) to allow users to customize their experience with the COT market report data. The API allows users to search and filter across columns for each of the datasets, including reporting date or week, commodity groups, subgroups, or name, and contract market name. Customized data report results can be downloaded to available formats — CSV, RDF, RSS, TSV, or XML. If the number of reported long positions fall significantly from a previous week’s COT Report, what is the likely explanation? Trader classifications are based on the information provided by the trader on their CFTC Form 40.

It provides a deeper breakdown of the market participants, splitting commercial traders into producers, merchants, processors, users, and swap dealers. The noncommercial participants are split between managed money and other reportables. 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. Reportable traders that are not placed into one of the first three categories are placed into the « other reportables » category. The traders in this category mostly are using markets to hedge business risk, whether that risk is related to foreign exchange, equities or interest rates. This category includes corporate treasuries, central banks, smaller banks, mortgage originators, credit unions and any other reportable traders not assigned to the other three categories.

They help traders make adequate choices, reduce risks, and, hence, support both short-term and long-term strategies. These are the main benefits the combination of COT analysis, COT report charts, and the appropriate tools could ever provide. Standalone long and short positions in their self do not give many insights about the overall positioning of a market participant.