Each week, commodity traders obtain a special report that offers them a highlight of positions held by bigger institutions and speculators. The commitment of traders report can be utilized as a sentiment indicator to capitalize on the market and profit from it. The report offers detailed information about the performance of every commodity available in the futures market. Aggressively traded future contracts like currencies, stock indexes, and interest rates have their special COT reports.
Many speculators utilize the COT report in deciding whether or not to pick a long or short position. One assumption is that small speculators are usually wrong and the ideal position is dissimilar to the net non-reportable position. Another notion is that commercial merchants have a clear mastery of their market, and therefore their positions attract more profits.
The COT report details the net long as well as short positions for each existing futures contract for three diverse types of traders. If commodity speculators are tremendously long or increasing their long positions, then a strong bias is expected on that market. A bearish bias on a market is expected when they are either short or amassing their short positions.
Mastery of the COT report becomes easy when you know the types of major players in the market and their corresponding positions. The data usually is presented in three special categories: non-commercial traders, commercial speculators, and non-reporting investors. Commercial speculators consist of institutions and accomplished investors who utilize the futures market to level off their risks specifically in the cash or spot market. A producer may decide to short his or her products to avoid instances of losses in case the price goes down in future.
Non-commercial trader comprises of major institution investors, hedge funds, as well as entities that are trading for both investment and growth. This group of speculators does not participate actively in creating, distributing, and managing underlying commodities and assets. Non-commercial investors have ability to navigate through the market shifts. Therefore, analyzing their investment strategies and their performance can give a hint concerning a specific asset class.
Non-reporting speculators comprise of small-scale investors who do not have to report their positions. It is assumed that this category is made up of individual speculators. The group of investors tends to bet against the trend rather than with it. Therefore, most accomplished investors pay little to no attention to this group.
COT report exists in different categories such as equity investor consisting of stock futures, commodity traders (gold and oil) and currency traders. It is better to deal with the report itself rather than dealing with raw data released by CFTC. The best strategy for deciphering the report and understanding the market trends is being consistent in seeing how the information is changing for some time.
Changes within open interest are an instrumental tool in mastering the price behaviour of a certain market and tactics for profiting from long-term trends. These changes can be utilized to gauge the general strength as well as the weakness of the trend. For instance, if a market has been experiencing long-term downtrend or uptrend with growing open interest levels, a decrease or balance would be a sign that the trend is approaching its end.
Many speculators utilize the COT report in deciding whether or not to pick a long or short position. One assumption is that small speculators are usually wrong and the ideal position is dissimilar to the net non-reportable position. Another notion is that commercial merchants have a clear mastery of their market, and therefore their positions attract more profits.
The COT report details the net long as well as short positions for each existing futures contract for three diverse types of traders. If commodity speculators are tremendously long or increasing their long positions, then a strong bias is expected on that market. A bearish bias on a market is expected when they are either short or amassing their short positions.
Mastery of the COT report becomes easy when you know the types of major players in the market and their corresponding positions. The data usually is presented in three special categories: non-commercial traders, commercial speculators, and non-reporting investors. Commercial speculators consist of institutions and accomplished investors who utilize the futures market to level off their risks specifically in the cash or spot market. A producer may decide to short his or her products to avoid instances of losses in case the price goes down in future.
Non-commercial trader comprises of major institution investors, hedge funds, as well as entities that are trading for both investment and growth. This group of speculators does not participate actively in creating, distributing, and managing underlying commodities and assets. Non-commercial investors have ability to navigate through the market shifts. Therefore, analyzing their investment strategies and their performance can give a hint concerning a specific asset class.
Non-reporting speculators comprise of small-scale investors who do not have to report their positions. It is assumed that this category is made up of individual speculators. The group of investors tends to bet against the trend rather than with it. Therefore, most accomplished investors pay little to no attention to this group.
COT report exists in different categories such as equity investor consisting of stock futures, commodity traders (gold and oil) and currency traders. It is better to deal with the report itself rather than dealing with raw data released by CFTC. The best strategy for deciphering the report and understanding the market trends is being consistent in seeing how the information is changing for some time.
Changes within open interest are an instrumental tool in mastering the price behaviour of a certain market and tactics for profiting from long-term trends. These changes can be utilized to gauge the general strength as well as the weakness of the trend. For instance, if a market has been experiencing long-term downtrend or uptrend with growing open interest levels, a decrease or balance would be a sign that the trend is approaching its end.
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