Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
The majority of the information can be found on the CFTC website, read the description of the various participants and their specific roles, and then ask your questions if you have any. As a general idea, the COT reports the net positions of the market participants and that can help you predict the medium-term trend direction.
I've really only studied the Gold disaggregated full report, so I'm unsure if what I've learned of the COT report is transferable to other commodity reports. I suspect all the reports are similar, but I don't know for sure. So caveat emptor. .
Most of the time the COT report information is a little bit stale on delivery. It's reported on Friday but contains the activity of market participants from Tuesday to Tuesday (starting two tuesday's ago up to the most recent tuesday). The disaggregated report categorizes the market participants into four different buckets: Producers, Swap Dealers, Managed Money, Other Reportables, and Non-Reportables.
Although the COT information does tend to be a little stale, I've found that it can still sometimes provide a nice little glimpse into the order book. About 6 weeks ago the gold report showed that the Swap Dealers had a huge short position when compared to what I considered normal (historically). Over the next few weeks gold declined and the reports during this time period were showing that the Swap Dealers were buying back shorts the whole way. But they weren't crossing the spread to do it. They just sat on the bid and bought back their shorts. Rally's didn't really go very far because more liquidity was being provided only as the market went lower. And the Managed Money guys seemed happy to keep smashing bids on the way down. The order flow seemed to have become somewhat mechanical because of the shear size of the positions that were held at the time. The COT information sort of advertised the fact that some huge positions were going to get un-wound one way or another.
Some of the other COT background information I've found: The producers are hedging their inherent longs, the Swap Dealers use the futures market to hedge their swaps books and are more likely to be passive. (Swap Dealers may not always be passive though, they are vulnerable to risks outside of their hedge trade.) The managed money guys seem to always be more motivated and are willing to cross the spread. I'm even less clear about the Other Reportables and Non-Reportables. They might be more of a mixed bag in terms of their order flow.
Here is today's report:
Kind of a stale report, but it looks like the managed money guys were covering shorts, which is consistent with the price action on HTF charts.
That's about all I think I know about the COT reports. Hope this helps, or at least starts a discussion. .
Here is the COT report in graph form from Quandle. There's Dealers, Asset Managers, Leveraged Funds and Other Reportables. Are Dealers the Market Makers, Leveraged Funds are Hedge funds maybe? Would Asset Managers be like Goldman Sachs and the such? Since Mutual Funds are typically near fully invested at all times they probably aren't part of any group?
Looking like Asset Managers are liquidating and Dealers are accumulating, what does this actually mean, if anything?
There are some (might be) successful traders rely on the CoT.
Look at "suricate trading" or "insider week".
Basicly its all about a ranging market and the rules Larry W. created a long time ago.
I have never found any further or helpful information regarding the CoT except that these markets sometimes are ranging and one can use a simple oszillator based on the commercials net position to find signals.
In fact .. insider week (Max Schulz) has gained its capital from a selled motorbike to nearly a million in 4,5 years.
But to archive this .. if nowadays possible .. you have to deal with risks of 1TUSD ore more per trade.
Look at the trades insider-week are listet.
There is some psycholigic power required beyond your starting capital to follow there approach.
I interpret all pre determined news and reports to have been studied and ripped apart and purposefully manipulated by large traders or corporations to skew the true supply and demand because nothing we see is really worthy of much in it's own
Why wouldn't I make some moves before or after the report to skew things
COT reports can be very useful for longer time horizon swing traders. Since the data are published weekly with a few days' lag, any trades premised on the COT data alone will likely take months to play out. But those can be great trades.
The basic idea is that if aggregate non-commercial / spec positions are crazy long, then there probably aren't many marginal buyers left in the market. All those who have already bought are meanwhile looking for an exit. So if, say, spec longs in beans just hit a multi-year high, but beans themselves printed a lower high with waning momentum, then we could be in for a bearish several months as those weak-handed longs get flushed. Same idea for big net shorts except that squeezes can sometimes be even more violent than liquidations.
Even for day-traders it can be useful to know how the crowd is positioned. It provides context.
In metals, ags, softs and energy the COT data tells a big part of the positioning story. In financials (bonds, currencies, indices), however, the COT data has only lilmited value, as the underlying cash markets typically capture far more of the overall volume. For example, a big macro hedge fund might be carrying a huge short in treasury futures to hedge the interest rate risk in their even bigger corporate bond book. COT shows them as a short even though they are flat or even net long bonds overall. In these markets I typically look at the COT data alongside other broader market positioning surveys to get a more complete picture of spec positioning. But again, positioning matters. A lot.
As long as you're aware of the data's limitations and familiar with its applications it can be a very valuable tool for traders.