The Commodity Futures Trading Commission publishes the Commitment of Traders report (COT) every Friday, and it measures the net long and short positions taken by traders in the futures market. It is a great resource to gauge market sentiment from the “big players” because of their large positions they are required to report to the government. Of course, it is very important to see what the “smart money” is up to because they move the markets and it may have an impact on your positions.
Below, we have an example of the Swiss Franc COT report taken from August 22, 2006 Check it out:
The report is pretty straight forward, but here’s a quick run down of what each category is.
- Non-Commercial - This is a mixture of individual traders, hedge funds, and financial institutions. For the most part, these are traders who looking to trade for speculative gains.
- Commercial - These are the big businesses that use currency futures to hedge.
- Long - number of long contracts reported to the Commodity Futures Trading Commission (CFTC).
- Short - number of short contracts reported to the CFTC.
- Open interest- this column represents the number of contracts out there that have not been exercised or delivered.
- Non-reportable positions;- These are the open interest positions of traders that do not meet the reportable requirements of the CFTC.
- Number of traders- total number of traders who are required to report positions to the CFTC.
- Reportable positions;- the number of options and futures positions that required to report according to CFTC regulations.
In the center of the report we see “CHANGES FROM 08/15/06.” This section shows the change in Open Interest and the changes in the Long and Short positions from the previous week.