Blog

The latest Commitments of Traders report issued Friday has resulted in some new signals taking effect on this week’s open of trading, but not a huge swing toward uncertainty or bearishness. My signal for the BKX U.S. Bank Index (a benchmark for U.S. financials) goes bearish on the coming week’s open of trading based Pivot Point on the most recent COT data. See my latest signals tablefor more details on trader positioning as reported in the free weekly COT reports from the CFTC. No new signals from the latest Commitments of Traders report Friday afternoon. Traders are relatively quiet, according to the CFTC’s free weekly COT data.

Asset Manager/Institutional – Institutional investors such as pension funds, insurance companies, mutual funds, and portfolio managers whose clients are institutional. These market participants include large banks and dealers that sell futures or sell various financial assets to their clients. One of the most important pieces of information this report provides is the ability to track the flow of money into and out of assets between the money management side and the hedge funds. The weekly report of traders’ positions also shows what individual traders are doing. The CFTC makes COT data freely available to anyone who visits their website. We believe this tool can go a long way toward helping traders avoid the fury of human instincts.

Track Record Of Our Weekly Market Timing Forecast!

This information is not intended to provide financial, tax, legal, accounting or other professional advice, since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested. As you can see above, the commercials were almost back to being flat in December 2015, right as the gold price bottomed. As price moved higher, commercial shorts started to grow again, confirming that a rally had begun. The rally ran until July when, on July 5th, the commercial position hit a new record short position of 340,270 contracts.

• Another way to use the COT report is as an indicator of market reversals.
• If a trader holds any open positions in a commodity for hedging, all of the trader’s open positions in that commodity will be classed as a ‘commercial trader’.
• This will help the trader to be able to track the smart money and get a better sense of when to enter or exit the market.
• Attaining an edge by understanding the flow of capital is an important concept toward your trading success.
• The smart money doesn’t tend to alter positions that frequently, hence a 3-day delay in reporting the data does not make the information irrelevant.
• Commitment of Traders HedgingThe monthly chart of Sugar above shows the Commercials net position from 1987 to 2010, labeled ‘_Better COT’.
• They play a role similar to that of the Securities and Exchange Commission in the stock market.

I encourage anyone interested in the markets to do your own homework and/or consult a professional advisor. I am not a certified financial advisor and am still refining my trading system. I reserve the right to modify or stop publishing aspects of my system at any time or Smart Money Using The Commitment Of Traders to delay updating my tables for whatever reason, or I may not do so in a timely manner. Past backtested and real-time results are no guarantee of future performance. I will not be liable for any losses or damages of any kind that result from the content of this site.

Who Are Commercial And Non

These are all factors that have an impact on asset managers to remain bullish in EUR/USD. As an example, if EUR/USD trades from 1.13 to 1.16 in the last 5 trading days the data is collected, and commercials show an overall increase, it’s telling us that they are betting with conviction for the price not to trade much lower. Otherwise, they may have refrained to gain that much exposure, waiting for Technical Analysis Of Stocks & Securities lower prices. Next comes the non-commercial positions, often referred as large specs. Remember that given the similarity of their business nature and correlation in positions, we will also include leverage funds in the explanation. It doesn’t matter the futures market you analyze, the same pattern will keep popping up, that’s why knowing their intentions and current positioning is cardinal.

Performance figures contained herein are hypothetical, unaudited and prepared by Alpha Architect, LLC; hypothetical results are intended for illustrative purposes only. Past performance is not indicative of future results, which may vary. There is a risk of substantial loss Smart Money Using The Commitment Of Traders associated with trading stocks, commodities, futures, options and other financial instruments. The results did show that, in terms of statistical significance, a 1-week-lag SMI slightly outperformed a 0-week-lag SMI over 20-plus years of history—but only at the margins.

Asset Managers: The Slow Moving Macro Whale

The code sample above calls the Commercials Long, Commercials Short and Total Open Interest data. Then it calculates the Commercials net position as a percentage of total Open Interest. The Commitment of Traders data is collected weekly after the close on Tuesday and the Commitment of Traders report is published after the close on Friday. You can find the weekly reports on the CFTC website in text and spreadsheet formats. Once you’ve downloaded and unzipped the Excel spreadsheet, the raw Commitment of Traders data looks like the screenshot above. The index funds are not going to change their positions a lot, just based on the supply/demand fundamentals.

So in this example, we can see that the majority of contracts are net long – therefore, the momentum is behind the buy side. This is a quick view of where money is being placed and should not form your opinion. Remember, our job isn’t to beat the market – but to enter it at the right time and take a business broker definition profit from it. It is important because you are becoming a trader that understands the flow of money. Like a car in a traffic jam, it is much easier to go with the flow of the traffic than drive against it. For example, it would be rare if in 1 week large net long positions would become net shorts.

Cot Reports Show Wrong Investors Pushing Rally

The first group, small specs, is comprised of people like you and me, who might trade a few futures contracts, while the second group, the large specs, are hedge funds and CTAs . The third group, often referred to as the “smart money,” is comprised of those who use the futures market to primarily hedge their business activities. Examples of commercials in wheat would include farmers, silo operators and bread makers, so we are looking at trades by the likes of Cargill, Archer Daniels Midland, Bunge, Kraft, Pillsbury and General Mills. As should be obvious, these commercial players know their industry, as they have been in business for decades and understand the market trends – supply and demand – that affect their business (hence the “smart money” designation).

Commitment of Traders on Crude Oil and BondsNow that the Commitment of Traders data is accessible within TradeStation, it’s easy to apply the COT indicators to other markets. From an Emini trading perspective, the most important markets to follow are Crude Oil and US Treasury Bonds. Since the large SP contract is used more for position trading and hedging, you’re better off basing your Commitment cd wick guide of Traders analysis on the large S&P contract data and ignoring the Emini data. Their ownership, as a percent of open interest, went up to 40% between 2014 and 2017. Before that time period, hedge funds had 27% of ownership open interest. As we head into the winter, money managers will be watching to see if the U.S. dollar stays strong and a favorable global currency, the economist says.

Why Following The Cot Offers An Edge?

If the SMI goes up a lot when the market drops, this could mean that the ‘smart money’ is buying, and the chart could be ready to move higher. The inverse is with a rapidly dropping SMI in a bullish market it could mean that the ‘smart money’ is selling and that the chart could be ready to fall lower. The SMI is a trend indicator within the context of current price action. Smart money flow indexorsmart money index is a technical analysis indicator that attempts to show the current market sentiment of investors.

Author: Korrena Bailie