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). The total open interest is given as well as changes in open interest. Information that is included in the report is compiled on Tuesday and verified on Wednesday before being released every Friday. The report provides the data, which is visualized in graphical form.
- So, forex traders get weekly updates on how institutional traders are positioned in currency futures.
- So, it is difficult to accurately track the volumes behind all forex trades.
- 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.
- While the COT report does not predict exact price movements, it shows the direction in which big traders are betting.
I’m Chaitali Sethi — a seasoned financial writer and strategist specializing in Forex trading, market behavior, and trader psychology. With a deep understanding of global markets and economic trends, I simplify complex financial concepts into clear, actionable insights that empower traders at every level. Whether it’s dissecting winning strategies, breaking down market sentiment, or helping traders build the right mindset, my content bridges the gap between information and implementation. Ultimately, the report serves as a sentiment compass, guiding traders through periods of uncertainty.
- Failing to factor in these relationships can lead to incomplete or misleading interpretations of the data.
- 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.
- Effective use of the commitment of traders report explained involves layering its insights onto your existing market analysis framework.
- Futures and forex trading contains substantial risk and is not for every investor.
Where is the Commitment of Traders Report published?
The long open interest should be equal to the short open interest. Open interest is needed to calculate the nonreportable positions. 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.
Combine with Technical Analysis
One of the most frequent errors is treating the COT report as if it were a short-term trading signal generator. Since the data reflects futures positions as of the prior Tuesday, it is inherently delayed and better suited for medium- to long-term market assessments. Attempting to use it for intraday or ultra-short-term trades often leads to poor timing and false expectations.
How to read a COT report
Before we discuss how to trade the forex market using the COT Report, you should know why the COT Report is important for forex traders. Commercial traders are big institutions who are in the futures market to hedge against risks due to unfavorable price movements that could affect their investments. They only trade for the sake of reducing risk, not for profit.
According to Investopedia and the CFTC’s official resources, there are four main types of Commitment of Traders (COT) reports. So, each serves a different purpose and gives a slightly different view of market activity. They leverage market data, including COT insights, to optimize trading outcomes while managing risk effectively. The Commitment of Traders report is a valuable commitment of traders report forex resource for Forex traders looking to gain an edge. Statistically, traders who incorporate COT data into their strategies can improve their win rates by up to 20%.
FXSSI.COT – Overview
Some follow a contrarian approach to positions taken by smaller speculators based on the belief they are often wrong. Others follow commercial traders’ positions, assuming they understand their markets best. In this case, traders can see what market participants in other markets are doing and compare it to the instrument they are trading using intermarket analysis techniques.
Non-commercial traders are large speculators who already have a lot of money in the bank, but want to make some more by trading the futures market. These major market drivers include institutional traders, hedge funds, big banks, and more. And the weight these traders pull on the markets can sometimes be staggering enough to drive trends. As retail forex traders, our best bet is to trade like big financial institutions. It is a report that contains a weekly overview of how participants of the futures markets in the U.S. have traded. The report contains all the positions of the main market factors in the United States.
We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and is not suitable for everyone. When trading with OANDA you can access a range of powerful analysis tools to identify potential opportunities and build a stronger strategy. As always, all trading tools are vulnerable to criticism and can be scrutinized.
Actionable Tips for Using the COT Report
The Commitment of Traders Report is a valuable sentiment tool, but it is not without its weaknesses. The most obvious limitation is its three-day delay between data collection and publication. Market conditions can change significantly in that time, particularly during periods of high volatility or after major news events. These examples highlight the importance of not just reacting to price but also understanding the positioning forces driving it.
The Asset Manager/ Intermediary Classification includes pension & mutual funds, endowments, insurance businesses and investment managers with mainly institutional customers. Open interest is the total of all futures and/or option contracts entered into and not yet offset by a transaction, by delivery, by exercise, etc. The aggregate of all long open interest is equal to the aggregate of all short open interest. How do I get a token to access the COT reports via API from the public reporting environment?
It helps traders understand what major institutions are doing and where sentiment is building. Several studies have shown that extreme speculative positioning often precedes market reversals. For instance, in 2008, before the financial crisis, speculative traders were heavily long on commodities and the Euro.
