What is COT reports. How Commitment of Trader can help you to trade better? Millionaire trader mindset
We continue to build millionaire trader mindset. And today I want to tell you about COT reports (Commitment of trader)
What is COT report (commitment of trader)? It’s the great resource of information published every week by government, usually on Friday (may vary at times due to holidays) and includes data from the previous Tuesday. The COT data shows the positions of three major groups of traders: Commercial, Non-Commercial (large speculator), and Unreportable (small speculator).. I use it my complex analysis and can tell you for sure it’s one of the best tools trader have to use to take decision in trading. It shows what kind of positions and how many positions are hold by retail traders, commercials, producers. COT report is great guindance for commodities swing traders. Besides, it’s absolutely free. You can find it on U.S. Commodity Futures Trading Commission (CFTC) website.
Reading through the report may provide some insight into how traders are positioned, but the real value is monitoring how these positions change over time. So, if you want to benefit from this type of insider information, you have to monitor reports each week. The size of position doesn’t tell you much. But what really matters is changes in positions. You have to look for accumulation of positions to identify coming trend.
To be more clear, you have to monitor changes over time in major trader positioning (commercial and large speculator). Because they have more information, they get this information faster and besides they know how to make money 🙂 For example, if large speculators are heavily bearish but then begin to decrease their short positions by buying, this trend is likely to persist for some time, and the price will move up accordingly.
Price moves are correlated with what large speculators do, so monitoring their positions can act as a confirmation for trade signals seen in the price action.
Look at big players and trade like insider!