Reader Questions Answered

Do you use the Commitment of Traders report to trade?

A forum member messaged me with the following question about the Commitment of Traders (COT) report:

hello,do you use the cot report to trade and which is the best service online to use for getting results with the cot data.can you use it from one week so see if the commercials are going long or short and then wait for the next week to get in or out depending on the commercials positions.

To answer the question about where I get the data, that They offer free charts going back about a year. All you need to do is register. Of course you can also get the data from the CFTC in a raw format.

As for whether I use it to trade, the answer is, “Not directly”. The COT data is lagged. The report comes out early each week for data collected as of the previous Tuesday. As such, you will never have the figures in a timely enough fashion that you could possibly use to them make short-term trading decisions. It’s more a question of seeing where the money is flowing and how the different trading groups are positioning themselves. That can help you track the smart money and work against the less-smart money.

By John

Author of The Essentials of Trading

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