The Commitment of Traders or COT report is an important fundamental piece of data that traders use to make decisions about how they will trade in the markets. It is released every Friday at approximately 2:30pm EST.
This report is a useful resource because it outlines how much commercial and speculative traders are net long or net short on certain currencies contained within. What this means is that the average individual who views this report may look over it and determine for themselves if there is value in getting short or long a specific position that they have been eyeing.
There are many different types of players in the market including hedgers, large speculators, and retail traders. Knowing where each group of traders are playing their bets may give you a better idea about how to place your own.
The Futures Market
You might think that the futures market doesn’t pertain to the trading that you do because you are a trader in the currency markets. However, the reality is that the futures market is the best gauge that we currently have for how the largest traders in any market are behaving. It is where you can pull some information that is relevant to the positioning of the largest traders out there.
The COT Report is a Great Starting Point
All traders should at least examine the COT report to see where other traders stand. It is important to try to gauge the behaviors of other traders to try to gain a little more insight into the way that the market is likely to behave going forward. Is it necessarily going to tell you everything? No, but it can help you get a good start on what you may need to do.