Commitment of Traders (COT) Analysis
Different COT Analysis
MAKING SENSE OF NUMBERS
INTELLIGENT INVESTING
Being a humble commodity investor with limited access to real market information we often ask ourselves - should I buy, sell or hold? How can I invest successfully, if I cannot sit all day in front of a trading terminal? Is there a way to know where prices will really go in near future?
There are endless resources for investors but many of them are based on questionable sources of info. Vastly they are always bullish. "Buy oil" they scream. But the price of oil goes both ways - we saw it at $100 and at $10 within recent years. However, they are always bullish. Which means they are wrong 50% of the time. Others sound too specialized and unclear, you read them and feel like you need a PhD degree to understand what they say. They do not reveal how they come to their opinion. Following them is a no-go too and in 2012 while studying commodity markets we came across COT (Commitments of Traders) report. This report is prepared by CFTC (Commodity Futures Trading Commission) and they report what positions different groups of market players hold and by analyzing the data we can make educated decisions.
What started out as a study, turned into a source of income and we can share our method with you.
WHAT IS COT EXACTLY?
In simple words COT is a huge table - 200 columns and it covers 200 assets. 200 by 200 values for every week. Some of the assets are very specific like propane or butter, others are very well known like oil or gold.
For each of the assets CFTC reports long and short positions of major players - commodity traders, hedge funds, banks, small investors, open interest, spreads, concentration etc. Unlike talking heads who always say 'buy oil', the COT report never lies.
COT report is released every Friday in the afternoon NY time.
OUR METHOD
We limit our scope to commodities that are widely traded. The more exotic the market is, the smaller size of it is, the more difficult analysis is, the higher chance is of the market being 'cornered' or manipulated.
We remove noise data. We focus on meaningful bits only.
We do not limit our analysis with basic charts. We look at the data from different angles.
We analyze markets temperature, players speed of buying and selling, identify zones of excitement or depression.
OUR VISION
Earning money with your brain. We are happy to do what we like.
We have years of experience trading commodity futures and options, qualification in accounting and finance risk management.
Invest in the background and sleep well at night is our mission. COT has been our trading bible for years and it proved to be a successful tool. It will work for you too.
Happy investing.
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