Commitment of Traders Report

Commitment of Traders Report

 The Commitment of Traders (COT) report is a weekly summary of outstanding positions in the US futures and options market. It covers futures in currencies, stock market indices, interest rates, precious and base metals, agricultural products and energy.

 The data shows the positions of commercial traders (those who are using the market to hedge their business activity) and large speculators, such as hedge funds. It is the only publicly available information on the positioning of hedge funds.

 FX investors watch the data closely to see whether hedge funds are buying or selling. In particular, it is widely assumed that as positions get to extremes (very long or very short a commodity), speculators are likely to slow down their activity and eventually start closing out their positions. Thus the report is most widely used to help find turning points in the market.

 In fact, research has shown that the positioning in the COT report reflects the FX market’s recent movements. It does not predict the market’s future movements. But as it’s the only information we have on the positioning of hedge funds, people will continue to look at it.