Commodity traders have an open access to a distinctive market report each week, which details the position of major corporate speculators and small investors in various future markets. This information is popularly known as Commitment of traders report. The report is an important analytical tool for traders since it offers up-to-date information concerning the trends in every commodity markets. It is also available on future contracts like interest rates, stock indexes, and currencies.
Many investors use the report to make wise investment decisions. For instance, they may use it to choose between long and short position. Most times, the investment trends of small speculators are ignored since they do not publish reports. The investment trends of commercial merchants are keenly followed due to their understanding of the market. Their positions are considered more profitable than those of small speculators are. Therefore, speculators who can decipher the report and make calculated guesses profit a lot from the commodity trading.
The COT report details the net long as well as short positions for each existing futures contract for three diverse types of traders. If commodity speculators are tremendously long or increasing their long positions, then a strong bias is expected on that market. A bearish bias on a market is expected when they are either short or amassing their short positions.
Understanding the different type of traders who exist in the commodity market is one-step towards mastering and interpreting the report correctly. The commercial group represents firms and institutions who utilize futures markets to balance out risks in either the cash or spot market. For instance, a corn producer may use shorting of corn futures contracts as way of protecting his or her profits in case the prices decrease in the near term.
Hedge funds, corporate investors, and other agencies who invest massively in the futures market fall into the category of non-commercial speculators. While these investors do not directly engage in the creations, supply, and management of essential assets and commodities, a special attention is paid to their trends. A careful review of their investment trends can provide vital information about a particular class of asset.
Non-reporting category is made up of small investors who never report their positions. They have a habit of betting against trends instead of with it. Thus, only a few people pay attention to this type of investors. The category comprises of private investors who trade in different types of products in the futures market.
There are different categories of COT reports ranging from equity investors (stock prospects), currency traders, and commodity traders comprised of oil and gold. Relying on raw data from CFTC might be confusing. Therefore, it is imperative to view the changes within the information for a significant period instead of a single snapshot.
Open interests can serve as an analytical tool especially when it comes to understanding the price behavior of a given market. The changes can help investors to expand their businesses and come up with long-term investment strategies. For instance, when the long-lasting market uptrend or downtrend begins to subside or level off, it may be an indication of an ending trend.
Many investors use the report to make wise investment decisions. For instance, they may use it to choose between long and short position. Most times, the investment trends of small speculators are ignored since they do not publish reports. The investment trends of commercial merchants are keenly followed due to their understanding of the market. Their positions are considered more profitable than those of small speculators are. Therefore, speculators who can decipher the report and make calculated guesses profit a lot from the commodity trading.
The COT report details the net long as well as short positions for each existing futures contract for three diverse types of traders. If commodity speculators are tremendously long or increasing their long positions, then a strong bias is expected on that market. A bearish bias on a market is expected when they are either short or amassing their short positions.
Understanding the different type of traders who exist in the commodity market is one-step towards mastering and interpreting the report correctly. The commercial group represents firms and institutions who utilize futures markets to balance out risks in either the cash or spot market. For instance, a corn producer may use shorting of corn futures contracts as way of protecting his or her profits in case the prices decrease in the near term.
Hedge funds, corporate investors, and other agencies who invest massively in the futures market fall into the category of non-commercial speculators. While these investors do not directly engage in the creations, supply, and management of essential assets and commodities, a special attention is paid to their trends. A careful review of their investment trends can provide vital information about a particular class of asset.
Non-reporting category is made up of small investors who never report their positions. They have a habit of betting against trends instead of with it. Thus, only a few people pay attention to this type of investors. The category comprises of private investors who trade in different types of products in the futures market.
There are different categories of COT reports ranging from equity investors (stock prospects), currency traders, and commodity traders comprised of oil and gold. Relying on raw data from CFTC might be confusing. Therefore, it is imperative to view the changes within the information for a significant period instead of a single snapshot.
Open interests can serve as an analytical tool especially when it comes to understanding the price behavior of a given market. The changes can help investors to expand their businesses and come up with long-term investment strategies. For instance, when the long-lasting market uptrend or downtrend begins to subside or level off, it may be an indication of an ending trend.
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