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 Most times, the investment trends of small speculators are ignored since they do not publish reports.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 outlines both the net long and short positions for the available futures contract for three types of merchants. If the traders are enormously long or they are just escalating their long positions, a robust bias on the market is expected. Increase of short positions result in a bearish bias on the future market.
Mastery of the COT report becomes easy when you know the types of major players in the market and their corresponding positions. The data usually is presented in three special categories: non-commercial traders, commercial speculators, and non-reporting investors. Commercial speculators consist of institutions and accomplished investors who utilize the futures market to level off their risks specifically in the cash or spot market. A producer may decide to short his or her products to avoid instances of losses in case the price goes down in future.
Non-commercial trader comprises of major institution investors, hedge funds, as well as entities that are trading for both investment and growth. This group of speculators does not participate actively in creating, distributing, and managing underlying commodities and assets. Non-commercial investors have ability to navigate through the market shifts. Therefore, analyzing their investment strategies and their performance can give a hint concerning a specific asset class.
Non-reporting speculators comprise of small-scale investors who do not have to report their positions. It is assumed that this category is made up of individual speculators. The group of investors tends to bet against the trend rather than with it. Therefore, most accomplished investors pay little to no attention to this group.
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 outlines both the net long and short positions for the available futures contract for three types of merchants. If the traders are enormously long or they are just escalating their long positions, a robust bias on the market is expected. Increase of short positions result in a bearish bias on the future market.
Mastery of the COT report becomes easy when you know the types of major players in the market and their corresponding positions. The data usually is presented in three special categories: non-commercial traders, commercial speculators, and non-reporting investors. Commercial speculators consist of institutions and accomplished investors who utilize the futures market to level off their risks specifically in the cash or spot market. A producer may decide to short his or her products to avoid instances of losses in case the price goes down in future.
Non-commercial trader comprises of major institution investors, hedge funds, as well as entities that are trading for both investment and growth. This group of speculators does not participate actively in creating, distributing, and managing underlying commodities and assets. Non-commercial investors have ability to navigate through the market shifts. Therefore, analyzing their investment strategies and their performance can give a hint concerning a specific asset class.
Non-reporting speculators comprise of small-scale investors who do not have to report their positions. It is assumed that this category is made up of individual speculators. The group of investors tends to bet against the trend rather than with it. Therefore, most accomplished investors pay little to no attention to this group.
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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