Let's Keep the COT Report Simple

If you have followed any of my writing, whether it be books, articles, columns or newsletters, you are aware of my reliance on the Commitments of Traders report, known simply as the COT report. This report is issued weekly by the Commodity Futures Trading Commission (CFTC) depicting where three particular groups of traders are positioned in each of the commodity futures markets. This information can come in handy when trying to predict future price moves because it gives us a glimpse into the minds -- and a snapshot of recent behaviors -- of large speculators, small speculators and commercial hedgers.

Not surprisingly, the CFTC tends to make matters far more complicated than they need to be; after all, they are a government agency and that is what they do best. For instance, on the CFTC.gov website, you will find various forms of the COT report. Some of them break down the aforementioned three categories even further (long format) and others include option traders in the stats. We focus on the simple three-category COT report known as the short format. Depending on the market and the situation, we might or might not include option trading data in our COT analysis, but for this exercise, we will....519 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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