Track The Largest Traders With The Commitment of Traders (CoT) Report
Track The Largest Traders explained by professional Forex trading experts the “Track The Largest Traders” FX trading team.
Track The Largest Traders?
What Is the Commitment of Traders Report?
How would you like to know what the smartest guys and girls in the room are doing? Thanks to a requirement by the Commodity Futures Trading Commission, the largest futures traders in the world are required to report their positions which can easily be tracked due to the margin they must pay to hold their large positions which the CFTC has been publishing since 1962 and since 2000, every Friday at 3:30ET pm. This information can be of extreme help due to the people who come into the Futures market like hedge funds to make a return above their respective index or some of the largest companies in the world with real-time data of the health of the economy that come to the futures market to hedge their exposure to price fluctuations of raw materials that they use to make their product or preform their service.
It may be helpful to think of the CoT report as a sentiment indicator with a lot more depth than most indicators. The depth, of course, comes from the fact that the readings are based on the largest future traders and can help you see when large fortune-500 companies switch their outlook on something that you’re trading. In short, this report provides incredible levels of insider intelligence that you’d be hard-pressed to find in another avenue.
Who Are the Players In The Report?
Commercials – Using the futures market primarily for hedging unfavorable price swings to their daily operations. They likely have the best insight as to what the demand and future is for the market as a hole and have some of the deepest pockets. These players are also known as commercial hedgers.
Examples: Coca Cola in the Sugar Market or American Airlines in the Gasoline Market
Non-Commercials (Speculators / Funds) – Traders, whether hedge-funds are large individuals, who have no interest in taking delivery but are rather in the market for profit and meet reportable requirements of the CFTC.
Examples: Hedge Funds and large banks or large Commodity Trading Advisors (CTAs)
Nonreportable Positions – Long & Short open interest on positions that don’t meet reportable requirements, i.e. small traders.
Examples: This is the leveraged players without deep pockets and are shaken out on big moves, similar to the DailyFX SSI.
How to Read the CoT for Directional Bias?
Upon the first reading of the CoT, you may be confused how future positions in USD, JPY, GBP or EUR could be helpful for trading EURUD, USDJPY, or EURGBP. There is a lot to learn about the Commitment of Traders report but what’s often helpful is to find when there is a very strong divergence between large speculators and large commercials.
Track The Largest Traders Conclusion
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