✍ The Commitments of Traders (CoT) Report
※ Speculative ─ mid to long-term positioning
※ Managed Money (Slow & Fast money) ─ near to medium-term positioning
☛ The CoT data is issued by the CFTC every Friday (Saturday, GMT+8) to provide market participants a breakdown of each Tuesday's (Wednesday, GMT+8) open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. In plain English, this is a report that shows what positions major traders are taking in a number of financial and commodity markets. It provides a powerful view on what exactly the big guys have been doing in the marketplace and what their plans might be.
☛ The CoT data is an essential tool for gauging current and future sentiment in Futures or Forex market. It is highly advisable not to use CoT data alone when it comes to your trading decision. This report is not designed as a market entry tool, as the market can be near-term bullish in a long-term downtrend. Although, it can be used to confirm the mid/long term fundamental bias in a given market.
☛ Though there is never one report or tool that can give you certainty about where prices are headed in the future, the CoT data does allow the small investors a way to see what larger traders are doing and to possibly position their positions accordingly. For example, if there is a large managed money short interest in gold, that is often an indicator that a rally may be coming because the market is overly pessimistic and saturated with shorts - so you may want to take a long position (on normal market conditions).
☛ I use the data to compare or combined speculative & managed money (instruments - currencies, equities, commodities, etc.) if I can identify a clear skewed bias in terms of the overall strength or weakness of a particular currency or instrument. Like for example... for USD, I check the positioning of these instruments ─ DXY, Gold, Yen, Nikkei 225 and 10-Year U.S. Bond.
☛ On this CoT data table, I added a corresponding correlation besides the symbol or instrument name (caution: it may be outdated). In correlation, there is also positive & negative between pairs or crosses. This can turn to “normal” at any time, making through a pair to fall and the other to fall slower or to go sideways. There is also the possibility for a pair to rally in order to “reach” the other pair.
☛ For technical analysis or you as a technician, watch for vital inflection points, and/or as an analyst that monitor headline risk as they relate to geopolitical situations and macroeconomic commentary.
☝ Always keep in mind that inter-market relationships govern currency price action. Therefore, you may need additional work in order to understand the CoT data.
✌ The CoT report - Futures data offer a proxy for volume but represent only a small fraction of the currency market.
☢ Since the report is issued every Friday (Saturday, GMT+8) that includes only the data from Tuesday to Tuesday only. The three days prior to the release date are not included. It means there is a three-day lag between the report and the actual positioning of traders. This is an eternity by short-term investing standards, and by the time the new report is issued, it has already missed a large amount of trading activity. Think of it as illegal insider information received early by Michael Corleone (CFTC) but then he gave it only to you after three days. ; )─
This post is for information purposes only, wherein it acts as references to my own trading journal (small part). No information contained herein should be regarded as suggestive to engage in or refrain from any investment-related course of action. It makes no guarantees as to the accuracy or completeness of the views expressed, including timeliness, suitability of any information - e.g. videos, images, and documents posted or shared herein. All contents on this post are subject to change and may have become unreliable for various reasons, including changes in the market conditions or economic circumstances.
In addition, please be reminded that there is always the potential for loss. Your trading results may vary. Unique experiences and past performances do not guarantee future results. Hence, it is highly recommended to seek a duly licensed professional for investment advice whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal.
CoT data ─ Week #51: Speculative positioning
CoT data ─ Week #51: Managed Money (Slow & Fast money) positioning
You may need to check another type of transformation of the CoT data (FREE) >>> https://freecotdata.com/currencies-2/