For one of the reports, Traders in Financial Futures, traders are classified in the same category for all commodities. Are you new to trading or looking to improve your understanding of market trends? One valuable tool to add to your toolkit is the Commitment of Traders (COT) report. However, the original COT reports can be lengthy and difficult to understand. That’s why I am sharing the simplified version of the COT report, specifically designed to help traders like you make sense of market data.
Why Is the COT Report Useful for Forex Traders?
- Algorithmic trading strategies increasingly incorporate COT data into their models, using it to adjust exposure based on shifts in institutional sentiment.
- So, following their footprints, you gain context many traders miss.
- This business purpose is specified by the firm itself and is checked by the CFTC on veracity.
- Non-Commercials (Speculators / Funds) – Traders, whether hedge-funds are large individuals, who have no interest in taking delivery but are rather in the market for profit and meet reportable requirements of the CFTC.
Measures of the average Trading Account Net Position Changes (PDF) are provided in two tables. In addition to providing average, futures-only trading volume and open interest, these tables also allow the reader to directly compare the two measures. Measures of the average Large Trader Net Position Change (PDF) are provided in two tables. These tables also include the average, futures-only trading volume and open interest. FindForexBroker.com is not liable for any trading losses based on this information.
- Additionally, the COT report provides the sum of all open interest and all changes.
- The 252-day correlation currently stands at 0.58, although not very high but still meaningful.
- The Disaggregated report splits the commercial traders into producers, merchants, processors and swap dealers.
Why, when I add up all long positions (or short), does the sum does not equal open interest? Why might the number of reported long positions fall significantly from the previous week’s COT Report? It is possible that there’s a lack of a sufficient number of Large Traders with respect to the contract market in question. Specifically, when the number of reportable Large Traders drops below 20 for a commodity or contract market, it no longer appears in the COT report. In such event, once a contract market has again reached 20 or more reportable Large Traders, the contract market will be added again to the COT Reports. It was on last week’s COT Report, but has been dropped from this week’s report.
For instance, if they facilitate large amounts of long commodity index exposure for clients via swaps, they become effectively short the underlying components and may buy futures to neutralize that risk. Understanding their role adds depth to the commitment of traders report explained in markets covered by the Disaggregated format. The value of the Commitment of Traders Report lies in its ability to reveal trader positioning data across different market participants. Large speculators, hedge funds, and commercial hedgers all leave a footprint in the report. Since these participants collectively control vast amounts of capital, their trading behaviour often precedes significant moves in the forex market.
They then use the futures market primarily to hedge the net risk exposure they gain from these swap transactions. This broad category includes large market participants who trade futures contracts strictly for profit, without an underlying business need for the physical commodity or financial instrument. The specific name (Non-Commercials, Managed Money, Leveraged Funds) depends on the report format being used. Because they operate in the physical market day-in and day-out, Commercials are presumed to possess deep knowledge about fundamental supply, demand, and value. This behavior means their extreme positioning often acts as a potent contrarian indicator.
Commodity Groupings
MarketBulls provides you the latest Commitment of Traders report as well as a clean, understandable chart preparation, cot commitment of traders forex data tables and the historical data for each market for the COT report. 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.
When sentiment shifted, a wave of short covering fuelled a strong rally. Traders who monitored speculative position trends were able to recognise the shift before it appeared on price charts. While the Commitment of Traders Report is a powerful sentiment tool, it works best when combined with technical analysis and fundamental insights.
This combination helps bridge the timing gap and ensures that positioning insights are interpreted within the current market context. By doing so, the Commitment of Traders Report becomes not just a static record of past sentiment but a forward-looking tool when used with other timely inputs. Speculative position trends in the Commitment of Traders Report provide one of the clearest windows into institutional market sentiment. By observing whether large speculators are steadily increasing or reducing their positions, traders can gauge the underlying conviction driving market moves. Gradual accumulation of long positions often signals growing confidence in a currency’s strength, while a persistent build-up of short positions reflects deepening bearish sentiment. Sudden shifts in trader positioning data — such as a rapid drop in long positions — often precede significant price moves.
TRADING
Divergences between price movements and COT positioning can provide strong trade signals. If a currency pair is rising, but non-commercial traders are reducing long positions, it may indicate that the uptrend is losing momentum. From the table above, I can observe that commercial traders are net short while non-commercial traders (speculators) are net long. This could indicate that institutions are hedging against a stronger Euro, while speculators are betting on an appreciation.
In fact, all reports are based on the same core data but presented in different ways. In fact, many forex traders use it to study market direction, as it helps them compare who is buying more and who is selling more. It’s clear that the COT report helps traders decide when to enter or exit trades. As an individual investor, you don’t necessarily need to trade futures to gain value from the CFTC’s weekly Commitments of Traders report.
Futures
Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Their business activities/ products are highly connected to the futures they buy and sell. The Dealer/ Intermediary Classification includes large local and international banks and dealers in different derivates. The other 3 classifications representing the market’s “buy side”. On the other hand, the Non-commercial Traders are the Large Speculators. That includes all traders that are not getting classified as commercial traders.
Volume Profile: a translation tool from price action to traded volume levels
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. Commercials – Using the futures market primarily for hedging unfavorable price swings to their daily operations.
By combining COT report analysis with other forex market sentiment indicators, traders can refine their decision-making process and align themselves with the most influential forces in the market. Markets move because of positions—who buys, who sells, and how much they hold. Before transparency rules, that data stayed with institutions. It shows where big players stand across major futures markets. In forex, those clues help traders track sentiment on currencies tied to futures.
Financial Traders Reports
One of the most effective ways to use the COT report is to identify trends and potential reversals. When speculative positions become excessively skewed in one direction, the probability of a market reversal increases. I look at historical extremes to determine potential turning points.
In fact, these tools show the data in charts and highlight position changes. Always check that you’re reading the right report type—Legacy, Disaggregated, or TFF—based on your market focus. As FTMO notes, the report works best on daily or weekly timeframes. It helps traders spot macro-level sentiment, not intraday signals. It helps traders see who is trading for profit and who is managing risk.
