COT Report Analysis
Reading institutional positioning data
The Commitments of Traders (COT) report shows positions of major market participants. Published weekly by CFTC.
Three groups: 1. Commercials (hedgers): Actual businesses hedging currency exposure. Contrarian indicator — extreme positioning signals reversals. 2. Large Speculators: Hedge funds and CTAs. Trend followers. When extremely long/short, trend may be near end. 3. Small Speculators (retail): Generally on the wrong side of major moves.
How to use: - Track net positioning over time for trend - Extreme readings signal potential reversal - Divergence between price and positioning = warning - Use as confirmation, not standalone signal
Pro tip: Use COT data as a weekly confirmation of your technical analysis — not as a timing tool.
Common mistake: Using COT data for day trading entries. Better: COT is weekly data — use it for swing trading and long-term positioning only.
Key takeaways
- COT shows institutional positions weekly
- Commercial extremes signal potential reversals
- Large specs follow trends
- Retail is often on the wrong side
Quiz
- Commercial traders in the COT report are typically: Answer: Contrarian/hedgers. Commercials hedge their business exposure — they tend to be contrarian to price direction.
Educational content, not financial advice.