Looking at the COT https://www.bidvestbank.co.za/ example in the table above, we can see that Nasdaq 100 futures, traded on the Chicago Mercantile Exchange (CME) had an open interest of 57,779 contracts on June 15, 2021. Of these, 14,320 were longs held by dealers and 10,875 shorts sold by institutional traders. 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. Generally, the data in the COT reports is from Tuesday and released Friday.
Gauging market sentiment
The exchanges that trade futures are primarily based in Chicago and New York. Understanding the Commitment of Traders (COT) report helps traders understand the market sentiment and what type of positions (long/short/spread) are market participants holding. The short format shows reportable open interest and week-to-week open interest changes separately by reportable and non-reportable positions.
How to apply COT insights to trading decisions
The aggregate of all long open interest is equal to the aggregate of all short open interest. There is not a list of historical release dates; the only available release dates are for the 13 months of reports that are published on the Commission’s website. This is meant to provide a clearer picture of what the people with skin in the game—the users of the actuals—think about the market versus the people with profit motivations or speculators. The disaggregated COT report is, in part, a response to some of the criticism of the legacy COT. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.
We and our partners process data to provide:
- This report shows a breakdown of open interest positions in three different categories.
- The aggregate of all long open interest is equal to the aggregate of all short open interest.
- And, despite its limitations, most traders agree that even the questionable data of the COT is better than nothing.
- It acts as a sentiment indicator, allowing traders to assess if the market leans bullish or bearish based on the net positions.
- The COT report categorizes traders into groups like commercials (hedgers) and non-commercials (speculators).
The COT reports are based on position data supplied by reporting firms (FCMs, clearing members, foreign brokers and exchanges). CFTC staff does not know specific reasons for traders’ positions and hence this information does not factor in determining trader classifications. Note that traders are able to report business purpose by commodity and, therefore, can have different classifications in the COT reports for different commodities. For one of the reports, Traders in Financial Futures, traders are classified in the same category for all commodities. As one would expect, the largest positions are held by commercial traders that actually provide a commodity or instrument to the market or have bought a contract to take delivery of it.
How Do You Use a COT Report in Forex Trading?
Extreme readings in net positions (either very https://www.absa.co.za/ 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. There have been recommendations to publish more detailed data on a delay as not to affect commercially sensitive positions, but that still looks unlikely. And, despite its limitations, most traders agree that even the questionable data of the COT is better than nothing. To help you analyze important trends and movements using the Commitment of Traders reports, Tradingster.com provides up-to-date COT reports (including COT reports’ historical data) and free COT charts.
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Every other reportable trader that is not placed into one of the other three categories is placed into the "other reportables" category. The long and short open interest shown as "Nonreportable Positions" is derived by subtracting total long and short "Reportable Positions" from the total open interest. Accordingly, for "Nonreportable Positions," the number of traders involved and the commercial/non-commercial classification of each trader are unknown. 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.
One should not get hung up on individual categories and focus on net positions (long minus short positions) for each group. A large net long position by non-commercials suggests a bullish bias, while a large net short position might indicate a bearish outlook. For example, traders are classified as non-commercial or commercial, and that holds sasol south africa limited for every position they have within that particular commodity. This means that an oil company with a small hedge and a much larger speculative trade on crude will have both positions show up in the commercial category.
