If you are an investor and your focus is on a specific market and you are interested in changes in the current positioning of various traders, you may be interested in the COT Report. In this article you will find out exactly what the report is and what data it contains.
What is the COT Report?
Written out COT means "Commitment of Traders Report". This is a report on a specific market that is published weekly. These reports can relate to the stock market, forex market, Bitcoin or commodities. The first report of this type was published back in 1924.
- The reports are up-to-date and include a snapshot of the positions of retail investors and institutional traders
- The reports are published every Friday at 21:30 CET
- The issuer is the "Commodity Futures Trading Commission", or "CFTC" for short
The report can help readers to Market dynamics to be able to comprehend and Conclusions for your own actions on the stock exchange. A look at the trading of commercial traders is particularly valuable here. They are characterized by a great deal of knowledge and experience and also have a large trading volume. Their trading can, for example, provide information on possible warning signals.
What is the CFTC?
The CFTC monitors the futures markets in America. It is an authority that pursues the goal of ensuring a high level of transparency with regard to the open positioning of market participants. The regular publication of COT reports also serves this purpose.
Which trader groups are included in the COT Report?
For the sake of clarity and informative value, the reports distinguish between different trader groups. The definition is made by the CFTC.
The so-called Non-commercial traders or also non-commercial traders are persons who do not have a business relationship in relation to the commodity in question, in that they may have a position in the markets to hedge their activities. In short, they are speculators. Their aim is not to obtain goods or to hedge against negative price developments.
This contrasts with the Commercial traders or commercial traders. You trade for a company or an institution. Futures markets are used here to hedge their own trading activities. Therefore, they are not speculators; instead, trading serves the purpose of hedging.
This group is the most important of the 3 groups. They do not take a speculative approach, but consider important business reasons. Analysts who take the reports into account when making their decisions assume that commercial traders base their decisions on Based on sound analyses and data have met. They also have the largest positions, which makes their actions particularly interesting.
The third group of retailers comprises the so-called Non-reportables or items not subject to reporting requirements. These are small traders who are not required to report. As they are not subject to reporting requirements, positions are determined by calculation. The difference between the positions of non-commercial and commercial traders in relation to the total open interest is calculated.
Open Interest is the total number of all contracts that are still open at the close of trading. This value is determined once a day at the close of the respective exchange. The data is passed on to the CFTC.
How can I read the COT report?
The reports are published on the official website of the Commodity Futures Trading Commission. The presentations can seem quite complex at first. In addition, it is not easy to distinguish between the different reports, which is why we take a closer look at the reports below.
The different types of COT report
Below we take a closer look at the different types of reports and the information they contain. The distinction can be important if investors want to work with a COT report, as you probably do not need all possible data.
Legacy Report
We start with the most common report among investors. Basically, there is a division into a long version, called long format, and a short version, called short format. This type is comparatively uncomplicated and easy to understand.
- Here is a breakdown of the open interest of the most important contacts with over 20 retailers
- All three retailer groups mentioned above are taken into account, even if there is no exact breakdown
The Legacy Report enables a closer look at long, short and spread positions. Investors can integrate data on futures and options. This report can be used to get a Overview and possible Trend developments to be able to estimate.
Disaggregated Report
The Disaggregated Report is comparatively new and has been published since 2009. You can also find a long and a short version here. The focus here is on a broader breakdown of market participants. Four groupings are classified for this purpose.
There are 2 types of commercial traders in this report: the "Merchant/Producer" and the "Swap Dealers". In addition, there are two non-commercial traders, the "Managed Money" and the "Other Reportables".
- Swap DealersThese are financial institutions that offer swaps (such as on currencies). These are hedged by futures contracts
- Managed Money: This is about funds with a fund manager who manages investors' money
The deeper breakdown is intended to provide a better overview of the interests of the various trader groups. It is more detailed and therefore provides more data for investors for whom a simple overview is not enough.
Another distinction is the focus: the Disaggregated Report focuses specifically on commodity markets. The report is not published for well-known equity indices, for example.
Traders in Financial Futures
Traders in Financial Futures has been published regularly since 1995. The reports focus on various financial futures. In the short version you will find some information about the futures contracts, in the long version are Futures and options visible.
Here, too, there is a different classification into four different dealer groups: Asset Manager/Institutional, Dealer, Leveraged Funds and Other Reportables.
Supplemental Report
This type also distinguishes between trader groups: non-commercial traders, commercial traders and index traders. The reports focus on 13 Agricultural commodity contracts. Options and futures positions are taken into account.
Conclusion: COT report as a useful source of information for investors
A COT (Commitment of Traders Report) report is a series of reports that are published every Friday. They report on specific markets and contain some Important information for investors.
These are managed by the CFTC (Commodity Futures Trading Commission), which monitors futures markets in the USA. In principle, reports distinguish between trader groups, whereby a distinction is often made between commercial, non-commercial traders and non-reportables. Depending on the report, further Classifications made.
There are four different types of reports: Legacy Report, Disaggregated Report, Traders in Financial Futures and Supplemental Report. The latter, for example, focuses on 13 agricultural commodity contracts and takes into account options and futures.
Investors can use the reports to draw conclusions about their own financial actions. For example, it is particularly useful to know how commercial traders behave on the stock exchange. They act on behalf of a company or institution and want to safeguard their own actions. Analysts therefore assume that well-founded decisions have been made on the basis of available data.