Commitments of Traders (COT) report

What it is

The CFTC's Commitments of Traders report breaks down the futures (and options) positions of large traders each week. Reportable traders hold about 70% to 90% of open interest. The data is as of Tuesday and published on Friday at 15:30 New York time.

There are three versions. The legacy report splits traders into commercials (mostly hedgers), non-commercials (large speculators) and non-reportables (small traders). The disaggregated report (since 2009) splits commodity markets further. The Traders in Financial Futures report (since 2010) covers currencies, indices and rates, with dealers, asset managers, leveraged funds and other reportables. TFF is the one forex traders usually want, through the currency futures.

How to spot it

• Look at net positions (longs minus shorts) for each group, and how they've changed.
• Extremes compared with the last year or two stand out.

How to use it

• Use it for the weekly or monthly backdrop: whether speculators are heavily positioned one way.
• Treat extreme positioning as a sign a move may be crowded, not as a timing signal.

Common mistakes

• Using it to time intraday trades; the data is days old when it comes out.
• Reading the currency future's positions as the whole forex market.

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