This article has been translated from English to Gen Z Slang.
The Commitment of Traders (COT) report is basically a weekly vibes check that shows what peeps in the U.S. futures market are holding. 📈
Every Friday, the CFTC (US Commodity Futures Trading Commission) drops the tea with the COT (Commitment of Traders) report. ☕️
This spicy report shows how the positions of futures traders—like commercials, small speculators, and large speculators—are shifting. 👀
Traders peep the COT report to spot extreme long or short positions in a currency, which could hint at some trend plot twists. 🔄
This guide helps them decide if they wanna go YOLO with short or long positions in their trades. 🎯
How to Read the COT Report
The Commitments of Traders (COT) is a report served hot by the Commodity Futures Trading Commission (CFTC). 🚀
It lays out the deets on who's holding what in the U.S. futures markets, mainly in the Chicagoland and Big Apple areas, where folks are shopping for commodities, metals, and currencies. 💰
The COT drops every Friday at 3:30 ET, spelling out the vibes of traders from last Tuesday. 🗓️
The COT report spills the tea on what three types of traders are up to:
- “Commercial traders” (in forex, usually hedgers)
- “Non-commercial traders” (typically, large speculators)
- “Nonreportable” peeps (usually, small speculators). 🙋♂️
The Net Non-Commercial Positions are like flex contracts held by large speculators, mainly hedge funds and banks flexing with currency futures for hype. 💼
Speculators aren’t gonna deliver the goods—they just wanna score some dolla bills by flipping their “sell” or “buy” vibes before the contract’s due. 💸
These contracts, available in lots which vary by currency, end up with either a mad surplus of buy requests (positive vibes on the chart) or sell requests (negative vibes). 📊
The Open Interest is the total number of contracts, stacking both the buy and sell squads, still in play among all market fam. 🤝
Basically, all futures and/or options contracts still live and kicking before being offset by a wizard move, delivery, exercise, etc. These figures are like the whole shebang, not just netting, so think of it as total squad action (hello, interest). 🎇
How to Use the COT Report
The Commitments of Traders (COT) reports can sometimes drop some massive hints about where the market waves are headed. 🌊
The CFTC makes big speculators and commercial traders, aka hedgers, report their net vibes twice a month. 🗂️
Usually, the large speculator vibe represents fund traders and pro peas who carry hefty positions. Commercial traders spill their net vibes to the CFTC too. 📈
The non-spillable positions vibes are figured out by subtracting the massive spec and commercial vibes from the total open interest glow. ✨
This crew of traders generally shows up as small speculators and hedgers keeping it chill without big positions to drop the tea on to the CFTC. 🕵️♂️
The COT report's deets help traders get inside the psyche of the market dungeon masters, peep the commercials' net positions, and watch out for big traders' vibes. 🧠
Big traders (funds) usually ride the trend waves and will either up their positions or bail, based on what’s technically going down since the report came out. ⬆️⬇️
There are a bajillion ways to vibe-check the reports, but mostly, keep an eye on the big traders’ net positions and their “change in position” over the latest two-week chill sessions. 👀
Remember, the small trader’s net vibe is usually on the edge, ready to get #rekt by either long liquidation or short-covering if the market rolls the other direction. 🔄
A bullish market wave would be when big traders are net long and small traders are net short; that’s classic, fam. 🐂
The market’s gonna be on sketchy bullish waves “if” the two-week trend in the big trader position is on the down-low, or in other words, if funds are bailing on their net long vibes—that's definitely a code red. 🚨
The bigger the net short vibe of the small trader (in terms of history, no cap) and the more those sneaker kids keep holding a position against the flow, the more the bullish hype rises. 📈
A classic bear market moves in when big traders hold a net short position (gets even more bearish if they add to it in recent weeks) with small traders hanging onto net long vibes (gets extra bear if that net long is pretty huge and trending downward). 🐻