COT Reports: Commitments of Traders Explained

The Commitments of Traders reports — or COT reports — are produced to help the public understand market dynamics. If you got started trading the traditional markets with Fusion Markets, a Prop Firm or even MetaTrader, this is a topic you need to master!

The “COT reports” provide a breakdown of Open Interest every Tuesday for futures and options on futures markets in which 20 or more traders hold positions equal to or above the reporting levels set by the Commodity Futures Trading Commission, or CFTC.

By the way, note that the CFTC publishes the weekly COT reports in a static format so that industry professionals can review and access each week’s data — but here at Captain Trading, we’ve set our sights on another site, completely free, to quickly review and interpret this essential data!

Every historical report can be viewed with the data for the week in question, along with all the historical data compressed into an annual file.

C.O.T Report | Definition of the Reports

The COT reports are based on position data supplied by the reporting firms (FCMs, clearing members, foreign brokers and exchanges). Although the position data is supplied by the reporting firms, the actual category or classification of the traders is based on the predominant commercial purpose the traders declare on the CFTC’s Form 40, and is subject to review by CFTC staff to verify that it is well-founded.

The reports are not intended to state the specific reasons for traders’ positions and, as a result, that information plays no part in determining traders’ classifications.

In practice, this means, for example, that the position data for a trader classified in the “producer/merchant/processor/user” category for a given commodity will include all of their positions on that commodity, whether the position is held for hedging purposes – or for speculation.

It’s worth noting that traders can declare their commercial purpose on a per-product basis, and so may hold different classifications in the COT reports for different underlying commodities. In fact, for one of these reports — titled “Traders in Financial Futures” — traders are classified in the same category across all commodities.

Owing to legal constraints, the information on how independent traders and other retail traders are classified in the COT reports.

In general, the COT report data is released on Tuesdays and Fridays. The CFTC receives the data from the reporting firms on Wednesday morning, then corrects and verifies it before releasing it on Friday afternoon.

What CFTC Stands For

The U.S. CFTC, or Commodity Futures Trading Commission, is an independent agency of the United States federal government. It is responsible for regulating the futures markets and the options markets. Here’s an overview of its role and functions

It plays a crucial role in overseeing the derivatives markets, which are essential for risk management across many sectors of the economy. These markets allow farmers, producers, businesses and investors to protect themselves against fluctuations in commodity prices and interest rates.

In short, the U.S. CFTC is a key institution in the United States financial system, providing regulation and oversight of the derivatives markets to protect investors, maintain market integrity and promote financial stability. It is this organization that publishes the COT reports.

Commitment of Traders: The 4 Types of COT Report

Legacy Reports

This report is the oldest and the most important one to watch — well, almost… It splits traders into two broad categories: the “Commercials” (commercial traders) and the “Non-Commercials” (non-commercial traders).

According to BBS, our traditional-markets specialist, you should watch the non-commercials’ reports first and foremost, because these are the big institutional players that “steer” the market.

To be more precise, also note that THE column to watch is the Change column, which shows the delta — that is, the change from the previous week. Volumes still matter, of course, because they give you a sense of the force behind the moves. That said, it’s the changes that will help you define your bias.

Take currencies, for instance: what becomes interesting is spotting the large changes in one currency relative to another in order to anticipate a bias.

For example, if you see the following situation: USD: +20K contracts and EUR: –20,000 contracts

There’s bound to be something interesting to do there!

If both show +20,000, then there’s no point looking at the pair.

Specific relevance: Commercial traders are generally market participants that use futures to hedge their actual business activities. Think of farmers and commodity distributors, for example.

The so-called non-commercial traders, on the other hand, are mainly speculators.

This report is especially useful for understanding price movements driven by speculation as opposed to commercial hedging.

What to watch: Keep an eye on the net positions of commercial and non-commercial traders.

For example, if the non-commercials’ net positions become extremely long while the commercials are extremely short, that could point to a coming correction, since the commercials are often seen as the best-informed.

Example using crude oil : Suppose the non-commercials have built up long positions at record levels while, at the same time, the commercials are increasing their short positions. This can signal that oil prices are about to fall. The reason is that the commercials’ top priority is to hedge; they habitually hedge to protect the value they have created or hold!

To compare like with like: what would your priority be if you held 100 BTC in spot?!

Keep speculating, or protect your assets?!

Personally, I’d hedge every single day if I held that much BTC; I’d keep a “big” account for hedging and a “small” account for trading. Who knows… maybe that’s already what I do 😉

Disaggregated Reports

Introduced in 2009, this report offers a more detailed view by dividing positions into four categories: “Producer/Merchant/Processor/User”, “Swap Dealers”, “Managed Money”, and “Other Reportables”.

This report helps you better understand the different roles of the market participants and their potential impact on prices.

For example, managed money is often made up of hedge funds, whereas the “Swap Dealers” are financial institutions that use swaps.

What to watch: Examine the managed money positions.

A sharp increase in long or short positions in this category can indicate a shift in market sentiment.

Example interpretation using the wheat market: If managed money sharply increases its long positions, that could indicate an expectation of rising wheat prices based on market analysis, weather forecasts or other fundamental factors.

Traders in Financial Futures (TFF) Reports

This report focuses on the financial futures markets, such as currencies, interest rates and stock indices.

It divides positions into four categories:

1. Dealer / Intermediary
2. Asset Manager / Institutional
3. Leverage Funds
4. Other reportables

This report is especially useful for analyzing traders’ positions in the financial markets, offering a perspective on the strategies and expectations of the various participants, notably asset managers and other speculative funds (leverage funds

What to watch: Keep an eye on the “Asset Manager/Institutional” positions (asset managers/institutionals). These traders represent large institutional funds, and their moves can have a significant impact on the markets.

Example interpretation using the U.S. Treasury bond market: If the “Asset Manager/Institutional” category increases its Short positions, that could indicate an expectation of rising interest rates and a fall in bond prices.

Supplemental Reports

This report is a supplemental version of the Legacy report for certain specific markets, offering additional information and a more detailed breakdown of positions.

Used mainly for markets where greater transparency is needed, this report helps provide more precise insights into the dynamics of certain specific markets.

What to watch: Use these reports to get additional detail on specific markets where greater transparency is needed. Look for significant divergences between the trader categories for precise insights.

Example interpretation using GOLD: If the supplemental reports show that the “Swap Dealers” are cutting their long positions while the “Managed Money” — the asset managers — are increasing their long positions, this could signal a short-term overvaluation and a possible correction!

And yes — it’s commonly accepted that asset managers aren’t the best operators…

Passionate about the traditional financial markets?!

1. Our Marchés Tradis session every Wednesday evening on YouTube at 8 PM!

To make sure you don’t miss this live stream or any other, I’d encourage you to turn on notifications directly, because simply following is no longer always enough to be alerted!

And if we’re running live streams right now, it’s so the information stays fresh and usable by as many people as possible!

2. Our two Saturday and Sunday sessions in the Discord Pro!

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Short Format VS Long Format

The reports are available in a short format and a long format. The short report shows open interest separately for reportable and non-reportable positions. For reportable positions, additional data is provided for commercial and non-commercial holdings, the split, the changes from the previous report, the percentages of open interest by category, and the number of traders.

The long report, in addition to the information contained in the short report, also groups the data by crop year where applicable, and shows the concentration of positions held by the four and eight largest traders. The supplemental report is published for combined futures and options on certain agricultural markets and, in addition to all the information contained in the short report, it shows the positions of index traders.

COT Report: The History, for the Enthusiasts!

The history of the Commitments of Traders (COT) reports goes back to 1924. That year, the U.S. Department of Agriculture’s Grain Futures Administration (predecessor of the U.S. Department of Agriculture’s Commodity Exchange Authority, itself the predecessor of the CFTC) published its first comprehensive annual report on hedging and speculative activity in the regulated futures markets.

Starting June 30, 1962, the COT data was published on a monthly basis. At the time, this report — covering 13 agricultural products — was presented as “a major step toward the transparency of financial operations vis-à-vis the public.” The goal was to provide current, fundamental data on futures-market activity to all market participants. These original reports were then compiled at the end of the month and published on the 11th or 12th day of the following month.

Over the years, the CFTC has improved the Commitments of Traders reports in several ways as part of its ongoing efforts to better inform the public about the futures markets.

The COT report is published more frequently: mid-month and end-of-month in 1990, every two weeks in 1992, and on a weekly basis from 2000 onward.

C.O.T Report: Faster!

The COT report shifts up a gear and speeds up its releases: the sixth business day after the “as of” date in 1990, then the third business day after 1992.

C.O.T Report: More Information

The report contains more information: data on the number of traders in each category, a breakdown by crop year and concentration ratios were added in the early 1970s; options position data in 1995; and a supplemental report in 2007 showing the positions of index traders in certain agricultural markets.

The report is also more widely available: it went from a subscription mailing list to paid electronic access in 1993 and, from 1995 onward, the reports became free on the CFTC.gov website!

Current and historical Commitments of Traders data is available on CFTC.gov, as is the historical COT data going back to 1986 for the futures-only reports, to 1995 for the combined options-and-futures reports, and to 2006 for the supplemental report.

How to Access the C.O.T Reports?!

cftc.org: The Classic Method

As you already know, it’s the CFTC that publishes the Commitments of Traders reports, and it does so on its official website! Here’s how to find them:

cot-reports.com: The BBS Method

cot-reports.com is a site that pulls together most of the reports to make them easier to read! I’ll let you explore it. What’s more, this site offers most of its services for free

Here’s an example: a report whose readability has been simplified!

Finally, if you want to learn more about the BBS method, I can only recommend his Marchés Tradis NV1 and NV2 courses!

They’ll let you get started in the traditional financial markets with a solid grounding and a turnkey strategy!