Question:
I am here in Australia and derive much peace from reading your articles. I am interested in understanding the COT concept. Please advise where I can access the data and decipher the numbers.
Bal from Downunder
Answer:
Peace? Perhaps you mean “satisfaction.” Either way, thanks for the compliment …
Below is the address for the COT Report. For those who might not know, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for market reports in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.
Be aware, the data is complex and raw. You will need to devise a methodology for utilizing it as a primary trading tool, and that is the rub. I would suggest checking out those who have developed a methodology for utilizing the data. Perhaps you could go to the Questions forum on this site and ask if someone uses a COT Report methodology for trading. If you have no luck there, type in “COT, trading” in your favorite search engine. You will find forums that discuss the COT report in detail. You will also find web sites that offer specific methodologies for trading solely on the data.
For me, I am not interested in trading solely on the COT Report data. For me, the report is just more data, just another part of the big picture that I want to understand at all times. It is helpful to know where the commercial money is going, but knowing this does not guarantee successful trading, although some out there would disagree with me strongly. Remember, the future is, well, the future, and knowing what will be is an educated guess at best. The “big money” can be wrong about the future, just as the rest of us can be. Having said this, the COT Report does indicate what I call “directional flow,” which is helpful in understanding where the commercial money is going, which is helpful in understanding potential market direction.
Trade in the day; invest in your life …
