Forex Trading Advanced Level Course
    About Lesson

    Commitment of Traders Report

    The Commodity Futures Trading Commission, or CFTC, publishes the Commitment of Traders report (COT) every Friday, around 2:30 pm EST.
    Because the COT measures the net long and short positions taken by speculative traders and commercial traders, it is a great resource to gauge how heavily these market players are positioned in the market. These are the hedgers, large speculators, and retail traders.
    Just like players in a team sport, each group has its unique characteristics and roles.
    By watching the behavior of these players, you’ll be able to foresee incoming changes in market sentiment.
    The Commitment of Traders reports from the futures market.

    The COT Report

    The COT Report

    Open up the address below in your web browser. Link Here 
    The Commitments of Traders (COT) Report

    Step 2:

    Once the page has loaded, scroll down a couple of pages to the “Current Legacy Report” and click on “Short Format” under “Futures Only” on the “Chicago Mercantile Exchange” row to access the most recent COT report.

    Step 3:

    It may seem a little intimidating at first because it looks like a big giant gobbled-up block of text but with a little bit of effort, you can find exactly what you’re looking for.

    Just press CTRL+F (or whatever the find function is of your browser) and type in the currency you want to find.

    To find the British Pound Sterling, or GBP, for example, just search up “Pound Sterling” and you’ll be taken directly to a section that looks something like this:

    Commercial: These are the big businesses that use currency futures to hedge and protect themselves from too much exchange rate fluctuation.
    Non-Commercial: This is a mixture of individual traders, hedge funds, and financial institutions. For the most part, these are traders who looking to trade for speculative gains. In other words, these are traders just like you who are in it for the Benjamins!
    Long: That’s the number of long contracts reported to the CFTC.
    Short: That’s the number of short contracts reported to the CFTC.
    Open interest: This column represents the number of contracts out there that have not been exercised or delivered.
    Number of traders: This is the total number of traders who are required to report positions to the CFTC.
    Reportable positions: The number of options and futures positions that are required to be reported according to CFTC regulations.
    Non-reportable positions: The number of open interest positions that do not meet the reportable requirements of the CFTC like retail traders.

    In order to understand the futures market, first you need to know the people making the shots and those who are warming up the bench.

    These players could be categorized into three basic groups:

    Commercial traders (Hedgers)
    Non-commercial traders (Large Speculators)
    Retail traders (Small Speculators)

    Commercial Traders

    Hedgers or commercial traders are those who want to protect themselves against unexpected price movements.
    Agricultural producers or farmers who want to hedge (minimize) their risk in changing commodity prices are part of this group.
    Banks or corporations who are looking to protect themselves against sudden price changes in currencies or other assets are also considered commercial traders.
    A key characteristic of hedgers is that they are most bullish at market bottoms and most bearish at market tops.

    The Large Speculators

    In contrast to hedgers, who are not interested in making profits from trading activities, speculators are in it for the money and have no interest in owning the underlying asset!
    Many speculators are known as hardcore trend followers since they buy when the market is on an uptrend and sell when the market is on a downtrend.
    They keep adding to their position until the price movement reverses.
    Large speculators are also big players in the futures market since they hold huge accounts.
    As a result, their trading activities can cause the market to move dramatically. They usually follow moving averages and hold their positions until the trend changes.

    The Small Speculators

    Small speculators, on the other hand, own smaller retail accounts. These comprise of hedge funds and individual traders.
    They are known to be anti-trend and are usually on the wrong side of the market. Because of that, they are typically less successful than hedgers and commercial traders.
    However, when they do follow the trend, they tend to be highly concentrated at market tops or bottoms.