What is Commitment of Traders (COT) Report?
This is a report which shows commercial and non-commercial trader position on a certain currency from Chicago Mercantile Exchange (CME). This COT reports get updated weekly and helps forex traders to gauge the market for the long-term position or to predict how the market could react in the upcoming week. Here non-commericial traders mean retail traders, commercial trader means institutional traders. Learn more about different types of forex traders from our forex school. Market Liquidity
How to trade with COT Report Forex?
Institutional traders always trade with large money in large volume. Hence their position holding matters for retail traders. If ten big banks buy euro with 65% of the total forex daily volume, then the market value of the euro will increase sharply. VIP traders and banks are the main market mover because of their high volume trading.
COT Report Terms:
|Open Interest:||It is the total number of contract outstanding. It includes the number of long positions as well as the number of short positions.|
|Non Commerical Long:||Retail traders number of buy future contract.|
|Non Commerical Short:||Retail traders number of sell future contract.|
If commercial long cross over the non-commericial long that definitely indicates market will now go into a bullish zone. Similarly, If commercial short cross below the non-commercial shorts that indicates market will not now go into a bearish zone. Increasing open interest also indicates power in the trend.
Example with EURUSD:
In this example above, we can see that commercial long line (light green) goes above non-commercial long line (deep green) for Euro future contracts. Which indicate a possible change in trend mostly bullish trend cause large traders are buying this euro. The line crossed on 29th April, so we will next look at the chart of EURUSD.
See with the chart of eurodollar, the market climbed up after 29th April date & market keep riding for next one week. Very good trading opportunities for position & day traders.