Commitments of Traders COT reports and charts

The concentration ratios are shown with trader positions computed on a gross long and gross short basis and on a net long or net short basis. The «Net Position» ratios are computed after offsetting each trader’s equal long and short positions. Since their performance is based on the average of the industry, this category plays it much safer, engaging in well-established trends or/and where they expect the price to be heading in a time horizon of at least 3 to 6 months.

Small Speculators – private investors and retail traders don’t have to report their positions to CFTC. 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 Commitment of Traders is a great tool to help you understand the market sentiment, but this report itself should serve you only as a benefiting advantage to your analysis and there should be a discretion exercised while using it.

Commitments of Traders Data (COT)

1. These tend to be right most of the time, but there are some exceptions to that.
2. As a result, a classic bullish set-up for a given market would be when large traders are net long and small traders are net short.
3. The Legacy and Disaggregated reports are available in both a short and long format.
4. Classical Non-Commercial Traders are Hedge Funds and Investment Banks.
5. They don’t take positions to speculate for profits but instead design various financial strategies to allocate assets to institutional clients.
6. The analysis of COT data offers numerous advantages that are highly important for both beginners and professional COT traders.
7. It is collated by the CFTC from submissions from traders in the market and covers positions in futures on grains, cattle, financial instruments, metals, petroleum and other commodities.

The COT report can be employed to confirm or challenge existing analyses derived from technical indicators or fundamental data. For instance, if technical analysis suggests a potential uptrend, a rise in net long positions by commercials in the trader’s COT report would strengthen this bullish outlook. The COT report should be combined with commitment of traders forex other market data (such as economic indicators and news events) to create a complete picture of the market sentiment. 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.

Commitment of Traders: What are COT Reports & How to Read them

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. Because of resource constraints, we are currently only able to release this report once a week.

THE COMMITMENT OF TRADERS FINANCIAL FUTURES (TFF) REPORT

1. COT reports are used by many speculative traders to help making decisions on whether to take a long or short position.
2. For the COT Futures-and-Options-Combined report, option open interest and traders’ option positions are computed on a futures-equivalent basis using delta factors supplied by the exchanges.
3. Those reports show the futures and option positions of traders that hold positions above specific reporting levels set by CFTC regulations.
4. Several financial websites and publications offer case studies and analyses based on COT data.
5. The Commitment of Traders (COT) reports provide a breakdown of each Tuesday’s open interest, based on the Futures-Only reports, for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.

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. Open interest held or controlled by a trader is referred to as that trader’s position.

He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey. By watching the behavior of these players, you’ll be able to foresee incoming changes in market sentiment. The Legacy and Disaggregated reports are available in both a short and long format.

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. The COT Open Interest is the total position that entered the market in a specific time. At the same time, we can use the open interest to analyze the behavior of specific market participants, for example, which percentage of the open interest was entered by the commercials. It breaks down the open-interest positions of all major contracts that have more than 20 traders. The legacy COT simply shows the market for a commodity broken into long, short, and spread positions for non-commercial traders, commercial traders, and non-reportable positions (small traders).

For example, in 2020, silver prices soared due to less risky purchasing. However, the COT report showed commercials (silver miners) increasing net short positions. This signaled potential exit pressure, and shortly after, silver prices reversed as predicted by the COT data. 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.

This group of traders is generally thought to be small speculators and hedgers who are not holding a position large enough to report to the CFTC. Current and historical Commitments of Traders data is available on CFTC.gov, as is historical COT data going back to 1986 for Futures-Only reports, to 1995 for option-and-futures-combined reports, and to 2006 for the Supplemental report. Extreme readings in net positions (either very high longs or shorts) can indicate a market nearing a turning point. However, these extremes can persist for a while, and the COT report shouldn’t be used for short-term trading signals. The reports are read as tables, which each row and column labeled appropriately (see the example above). The information in the report indicates how much interest there is, both long and short, in various derivatives contracts, and which type of market actor is involved.

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. Key turning points in the chart, more often than not, occur when the commercial positions are at extreme levels or at areas of significant reference, having previously acted as a turning point. Long Noncommercial Positioning represents the long open interest of noncommercial traders.