The Commitment of Traders (COT) report is released weekly by the Commodity Futures Trading Commission (CFTC) every Friday at 15:30 Eastern Time. The COT report shows how large speculators, commercials and small traders have placed their bets in the futures markets in terms of open interest information based on the previous Tuesday, and is an invaluable tool that can be used to track the market sentiment in currencies, commodities and stock indices.
There are three categories of traders in the report as defined by the CFTC.
These participants are mainly hedge funds, banks etc that trade currency futures just for speculation.
These are participants that uses the futures contracts for hedging purposes, and these commercial participants are generally exporters and importers who may use the commodity or currency futures markets to take a position that will reduce the risk of financial loss in their assets due to a change in price.
These participants are small speculators like retail traders
Note:
In the graph we are only showing the net and total positions of large speculators and small traders as this information is the most useful for trading.
- In currency futures, the convention is to quote the foreign currency directly against the US dollar. For example, the Swiss franc is quoted versus the US dollar in futures, unlike the USD/CHF notation in the spot forex market.
- It is more important to note whether the large speculators are net long or short in specific commodities or currencies. By comparing the latest net positioning with that from the past few weeks or months can give an indication where the market is going.
- 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 nonreportable position.
Copyright © 2024 The Success Framework - All Rights Reserved