Commitments of Traders Report (COT)
The Commitment of Traders (COT) report is a weekly publication that shows the aggregate holdings of different participants in the U.S. futures market. This weekly publication provides a snapshot of the commitment of the classified trading groups as of Tuesday that same week. The report provides investors with up-to-date information on futures market operations and increases the transparency of these complex exchanges. It is used by many futures traders to determine whether they should take short or long positions in their trades.
The COT (Commitment Of Traders) data, which is exceptionally important, is the sole source of the actual holdings of the three key commodity-trading groups, namely:
a. Commercial Traders — This group consists of traders that use futures contracts for hedging purposes and whose positions exceed the reporting levels of the CFTC. These traders are usually involved with the production and/or processing of the underlying commodity.
b. Non-Commercial Traders — This group consists of traders that don’t use futures contracts for hedging and whose positions exceed the CFTC reporting levels. They are typically large traders such as clearinghouses, futures commission merchants, foreign brokers, etc.
c. Small Traders — the positions of these traders do not exceed the CFTC reporting levels, and as the name implies, these are usually small traders."