Weekly Commitment of Traders (COT) reports are great. They can provide really valuable forward-looking information that can help you trade more profitably. Let’s talk about what the weekly Commitment of Traders report is, why it matters, and how it can make you a better trader.
To start: When are these COT reports published? They're published every Friday, with the exception of holidays. And, once in a while, there's a US Government shutdown - then the reports are delayed by a few days or weeks. Usually, they're reported every Friday.
But there’s a twist: COT data published on Friday is gathered as of the previous Tuesday. So the data is always delayed by at least three days. And by the time you get into the next week, that data becomes four, five, six, seven days delayed.
So, COT data is not published every day. It's not live. It’s always delayed by at least three days.
On the CFTC site (below), you'll find all the different COT reports listed by year. You can either use code, e.g., Python, to scrape the site, or you can simply download the reports as Excel (.csv) files for your analysis. A second option for finding COT data is to access it via a trading platform like Bloomberg or Reuters or TradeStation.
You can visit this site to view and download historical COT data.
CFTC website where you can access to the COT report each week
COT reports are especially valuable for agriculture futures - less so for energy or metal markets.
Why is that?
It's because most of the volume that's traded in agriculture markets is done via futures. The CFTC sees all that future's trading volume on its exchanges, and it says, "Okay, we can report that. We can quantify that and wrap our arms around that."
For energy and metals, there's a lot of trading volume that's done OTC (over the counter).
So COT data isn't quite as valuable for energy and metals as it is for agriculture markets.
Now without complicating things too much, there are actually two COT reports that you need to know about:
The Supplemental report: Agriculture specific. It has 13 agriculture markets.
The Disaggregated report: 150 different markets, including all major agriculture, energy, and metal markets.
The 13 agriculture markets covered in the COT Supplemental report
We'll do a deeper dive into the differences between the two COT reports and those market participants when we talk more about commodity market participants.
So what have we established?
The COT report is a weekly report.
It's always delayed by at least a few days.
It's pretty easy to find (website here).
It shows you positioning details across some important investor categories:
Hedge funds
Commercial traders
Index funds
Small private traders
Now, you might be saying, "Okay, that's great. How can I use this report to trade? How can I use the data that's in the COT report to make profitable trading decisions?"
You can find out more about building real systematic trading systems using COT data in the article here - but at a very high level, this is how you should think about trading COT data:
Imagine sitting down at a poker table and you can see most of your opponent’s cards. You can see what the other players hold. You don't know everything that they hold, but you have some very important clues about if they have a good hand or a bad hand.
That's how the CFTC COT report works.
You know that hedge funds are extended really long, or they're extended really short, or maybe index funds are extended really long, or they're extended really short, and you can see how vulnerable those positions are.
We're going to build some trading systems in our third article on COT reports around that idea.
Are hedge funds too long and vulnerable to a long liquidation?
Or are they too short and they're vulnerable to a short squeeze?
This COT information is tradeable. You can read more here.
Peak Trading Research is the only company that provides clients with daily estimates of COT hedge fund positions across all energy, metals, and agriculture markets.
If you're interested in a trial of our research, you can reach out to us at insight@peaktradingresearch.com.
