By understanding market sentiment through the lens of the COT report, you can make informed trading decisions. As a quick reminder and as mentioned earlier, as markets grow and more participants enter the markets, extreme positioning levels can be broken and new all-time levels are created. The same chart also has examples of broken historical positioning levels. One of the main problems that traders face when using various trading tools is that many indicators are based on price data, and therefore, in many cases, the different indicators end up duplicating the same message.

• It was on last week’s COT Report, but has been dropped from this week’s report.
• The COT report can be used to monitor market sentiment; however, it is best used as a supplementary tool alongside other market analysis methods.
• By analyzing the net long and net short positions, traders can gauge market sentiment, spot potential turning points, and understand whether smart money or speculators are driving price moves.
• Technical analysis can identify chart patterns, breakout levels, and momentum changes, while COT report analysis verifies whether institutional traders support the move.
• Risk capital is money that can be lost without jeopardizing ones’ financial security or life style.

Shedding a little light on large trader maneuvers in futures markets

These weekly flows provide valuable clues about the immediate buying or selling pressure influencing the market. Divergences occur when price action and the positioning of key trader groups move in opposite directions. These can be powerful (though not infallible) signals of potential trend weakness or reversal.

Why Is the COT Report Useful for Forex Traders?

Even disaggregated data is too aggregated to accurately reflect the market. The COT report is a powerful tool for forex traders seeking to understand market sentiment. By interpreting the data effectively, traders can enhance their strategies and improve their risk management.

In other words, the dollar is likely to remain range-bound in the short term. The COT report, or Commitments of Traders, shows the position status of major market participants in futures and options trading. This chart only shows positions of the non-commercial (speculative) traders.

The traders in this category mostly are using markets to hedge business risk, whether that risk is related to foreign exchange, equities or interest rates. This category includes corporate treasuries, central banks, smaller banks, mortgage originators, credit unions and any other reportable traders not assigned to the other three categories. 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. The Commodity Futures Trading Commission (CFTC) is an independent entity within the United States government responsible for overseeing and controlling futures and options markets. One of its functions is to provide transparency in the financial markets by publishing the Commitment of Traders report.

Commitment of Traders Report: Key to Forex Market Sentiment

The Commodity Futures Trading Commission (Commission or CFTC) publishes the Commitments of Traders (COT) reports to help the public understand market dynamics. Each historical report is viewable with the data for the respective reporting week, along with all historical data compressed within an annual file. Many traders misuse the Commitment of Traders Report because they misunderstand its purpose and time horizon.

If I notice that speculative long positions are reaching extreme levels, I might anticipate a reversal as institutions begin to take the opposite side of the trade. These bots are designed to adapt to various market conditions across major pairs like GBP/USD and USD/CHF, ensuring a robust trading experience. I’ve developed a portfolio of 15 trading bots that incorporate COT data as part of their strategy. This powerful tool can help you make informed trading decisions in the Forex market. Ever feel like you’re trading in the dark, unsure of where the market might go next? Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone.

For instance, near significant market bottoms, it’s common to find Commercials at extreme net long levels while Non-Commercials are simultaneously at extreme net short levels. This stark disagreement between the supposed “insiders” and the large trend-following speculators frequently flags zones ripe for a potential major trend reversal. This dynamic is a critical component of the commitment of traders report explained. Whether looking at raw text or graphical charts, identify the columns showing long, short, and sometimes spreading positions for each trader category. Pay close attention to the columns indicating the change from the previous week and the number of traders in each group.

No, the standard CFTC Commitment of Traders reports focus exclusively on futures contracts and options on those futures. This includes commodities, currencies, interest rates, and broad stock market indices (like S&P 500 futures). The commitment of traders report explained here does not provide positioning data for individual company stocks or Exchange Traded Funds (ETFs).

FXSSI.COT – Overview

Due to legal restraints (CEA Section 8 data and confidential business practices), the CFTC does not publish information on how individual traders are classified in the COT reports. Hypothetical performance results have many inherent limitations, some of which are described below. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading.

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• The comparison of the net positions is giving us the first understanding of the overall situation.
• When the crisis hit, these positions unwound, leading to sharp declines in both markets.
• It is just a simpler way of seeing who is holding the biggest positions.
• CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The category called “dealer/intermediary,” for instance, represents sellside participants. Typically, these are dealers and intermediaries that earn commissions on selling financial products, capturing bid/offer spreads and otherwise accommodating clients. The remaining three categories (“asset manager/institutional;” “leveraged funds;” and “other reportables”) represent the buy-side participants. These are essentially clients of the sell-side participants who use the markets to invest, hedge, manage risk, speculate or change the term structure or duration of their assets. A “money manager,” for the purpose of this report, is a registered commodity trading advisor (CTA); a registered commodity pool operator (CPO); or an unregistered fund identified by CFTC.

In this screenshot, the largest positions are held by the long swap dealers. As retail traders, we don’t have a lot of insight into what goes on behind the scenes, in the markets. Things are getting better with advances in technology, but transparency is still low. This data is derived from official government reports, and has undergone extensive error correction and additional proprietary computation and formatting and is Copyrighted (c) by Bullish Review 1987 – 2025. This data is for personal use only and may not be retransmitted, repackaged, resold, reprinted, commitment of traders report forex or displayed in numeric or graphic form.

Risk Management

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. 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.

While the position data is supplied by reporting firms, the actual trader category or classification is based on the predominant business purpose self-reported by traders on the CFTC. Non-reportable traders don’t have the heavy bank accounts of commercial and non-commercial traders. They are speculators with smaller accounts who are also looking to make money from the futures market. The story is the other way around for non-commercial traders.

Currency Groupings

Positioning in one currency often reflects sentiment in commodities, equity markets, or interest rates. Failing to factor in these relationships can lead to incomplete or misleading interpretations of the data. Similarly, in 2023, the Australian dollar faced heavy short positioning during global economic uncertainty. 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.