COT Report - What is it?

COT report is one of the best tools to analyze true market situation.

It all started in 1990's when CFTC (Commodity Futures Trading Commission) issued first COT report. At that time COT was one month delayed (today it is three days delayed only) and it was only split into Commercial and Speculators groups. Yet, despite such a delay the report became very popular. It is a truly effective mean of analyzing market equilibrium.

Some time along the way, CFTC decided to produce better data and they split Speculators into Managed Money (hedge funds) and Other Speculators (commodity traders, proprietary trading firms, family offices, small banks etc) and they split Commercials too into Producers (they deal with physical commodity) and Swap Traders (large financial institutions acting on behalf of their clients).

Currently, the cut-off day for COT is market close Tuesday and the report is released on Friday afternoon. The report covers 200 different assets. In our COT analysis we look at 13 most traded markets. It is important to keep in mind that smaller markets are easier to manipulate. One of the metrics we produce is our estimate of the market size. It tells two things - how hot market is and how easy market can be manipulated. This topic will be covered in other posts.

Happy trading!