What is the Commitment Of Traders report, and why should you use it?

The Commitment Of Traders (COT) Report may be the only good thing the gov't has done right.

The COT is a summary of net positions (long, short, neutral) of professional money managers. The beauty of this report is it breaks down each faction of professional money so you can see what the smart money (commercial speculators) and dumb money (pension funds, managed money), is doing. There are reports for most major asset classes like forex, commodities, energy, indices, etc.

BarChart has the best presentation of the data in my opinion. You can check it here https://www.barchart.com/futures/commitment-of-traders

Here's an example of the COT on the Canadian dollar:

On the lower indicators of the chart you will see net positions for "Large Spec" (dumb money), "Small spec", and "Commercial Speculators" (smart money). In the example above, you can see that smart money has positioned for a move up in CAD, and that's exactly what is occurring. Neat huh?

The nice thing about the COT report is you can see exactly what high performing professional traders are doing, without having to do the hard number crunching. You can also see the past performance of a certain faction of traders to judge the accuracy of their contrarian positioning going forward. In many charts the price action moves are not as clear as they are in this one. IE, Sometimes smart money will position for a breakout yet no move--or an opposite moves--occurs. Heck, sometimes the dumb money gets more moves right!

I recommend using the COT report as another indicator in your trading toolbox. Never rely on it totally. However, if you believe banksters and insiders have an edge (which I do), this is one way of benefiting from that edge.

Also, in ever-changing markets with more and more uncertainty, it can be nice to have an inside view into what everyone else is thinking. Enjoy and use responsibly!

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*Disclaimer: Past performance does not guarantee future results. Never rely solely on one indicator. Only risk money you are willing to lose. Do Your Own Due Diligence. Never risk money based on someone else's recommendation. This is not a trading recommendation.