COT Commitment of Traders Index

OVERVIEW

Commitment of Traders (COT) Indicator is a trading tool which designed to visualise net positions/commitment of traders that is reported weekly basis to the commissions.

CONCEPTS

The Indicator help you understand the position of long or short trades by market participants relative to their historical positioning. The change in position will help you in analysing the medium-to-long term market trend.

The commercial traders represents producers or consumers of the commodity that usually positions as hedgers in the market, protecting their asset over market fluctuation risk. The non-commercial traders represents fund or money managers that the goal is speculate and take profit from the market fluctuations. Non-reportable represents small or retail traders.

Understand the relative of those all traders will give better insight of how to positions ourselves in the market.

DETAILS & EXAMPLE OF HOW TO USE

An example of Gold Future chart (GC1!) to demonstrate the indicator in real market scenario.


Blue graph indicate the Commercial Index, showing on the extreme low under 20 level. Commercial traders as a hedgers indicate the turning point over an asset in extreme value. This showing the potential change in market direction the upside.


On the same time, Orange graph indicate the Non-Commercial Index, showing an extreme high level above 80. Non-Commercial traders will most of the time trade with the trend. This showing the potential continuation of market direction to the upside.

Base on those information, combine with other technical strategy on the same timeframe or even lower timeframe. For example using Supply & Demand to find the entry.


The result is a massive push to the upside in the long term direction.

FEATURES

• 3 Index in 1 indicator
  
• Customisable historical period and threshold
  

LIMITATIONS

• The Indicator is best applied on weekly, due to the weekly release of COT data.
  
• Not intended as a stand-alone signal, but should be as part of long-term strategy analysis.
  
• Should be combined with other lower-timeframe technical tools like supply and demand.