The Commitment of Traders (COT) is a report released by the Commodity Futures Trading Commission (CFTC) every Friday. It provides a breakdown of the positions held by different types of traders in the futures markets. The report is based on data collected from the previous Tuesday and is useful for traders and analysts to gauge the sentiment of the market and the positioning of large traders.
The COT report breaks down the positions of traders into three categories: commercial traders, non-commercial traders, and non-reportable traders. Commercial traders are typically large institutions that use the futures markets to hedge their business risks. Non-commercial traders are typically large speculators such as hedge funds and commodity trading advisors. Non-reportable traders are typically small speculators.
The COT report can be used in a number of ways. For example, traders may look for divergences between the positions of commercial and non-commercial traders, as this can provide clues about potential price movements. Traders may also look for extreme positioning by non-commercial traders, as this can sometimes indicate a market top or bottom. However, it's important to note that the COT report is just one tool among many that traders use to make trading decisions.
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