Commitments of Traders Report (COT)

The Commitments of Traders (COT) report is a weekly publication issued by the Commodity Futures Trading Commission (CFTC) in the United States. It provides a breakdown of the positions held by different types of traders in the futures markets. The COT report is used by traders and analysts to gain insights into market sentiment and to identify potential trends and reversals.

The COT report categorizes traders into three main groups:

1. Commercial Traders: These are typically large companies or institutions that use futures contracts to hedge their business operations. They are considered the “smart money” and are often seen as having a better understanding of the underlying market fundamentals.

2. Non-Commercial Traders: These are typically large speculators, including hedge funds, commodity trading advisors, and other institutional investors. They trade futures contracts for investment purposes and are often referred to as “managed money.”

3. Non-Reportable Traders: These are smaller traders who do not meet the reporting requirements set by the CFTC. Their positions are aggregated and reported as a single category.

The COT report provides a breakdown of the long and short positions held by each group of traders in various futures markets. It also shows the changes in these positions from the previous week. This information can be used to analyze market sentiment and identify potential turning points.

Traders and analysts often focus on the positions of non-commercial traders, as they are seen as more speculative and trend-following in nature. When non-commercial traders are heavily long or short in a particular market, it can indicate a potential trend reversal. Conversely, if commercial traders are heavily positioned in the opposite direction, it may suggest a continuation of the current trend.

It’s important to note that the COT report provides a snapshot of market positions as of the report’s release date, usually on Fridays. Therefore, it is not a real-time indicator and should be used in conjunction with other technical and fundamental analysis tools.

In conclusion, the Commitments of Traders (COT) report provides valuable information about the positions held by different types of traders in the futures markets. It is used by traders and analysts to gauge market sentiment and identify potential trends and reversals.