How to Use the Commitments of Traders (COT) Report in Forex Trading

2025.12.22 2026.01.02
How to Read and Use the COT Report in Forex Trading

Alex Rodionovhttps://www.litefinance.org/blog/authors/alex-rodionov/

Commitments of Traders (COT) reports are published weekly by the Commodity Futures Trading Commission (CFTC). Although these reports contain data on the futures market, insights gained from them can be applied to the spot market.

Thanks to its relative ease of interpretation and analysis, this report can become an indispensable tool in Forex trading. COT forex reports allow you to use trend-following trading strategies, as well as to fairly accurately predict market reversals by applying fundamental analysis.

Major Takeaways

• COT reports are published by the Commodity Futures Trading Commission on Fridays and reflect data for the previous week.
• The COT forex data is free to access. In addition, there are many COT tools and indicators available to simplify interpreting this data.
• The COT reports highlight three categories of market participants: non-commercial, commercial, and non-reportable traders.
• By analyzing COT forex reports, you can confirm the current trend or spot trading signals.
• You can use the COT data to predict market peaks or troughs, which may be followed by a correction or a reversal of the prevailing trend.

What Is the COT Report in Forex Trading?

Information is one of the essential building blocks of successful trading in financial markets. Today, traders can obtain this information from various sources, including publications that provide insight into market sentiment, which in turn can help them make informed decisions. COT reports are a prime example of such publications.

What is a COT? The COT stands for Commitments of Traders. The COT forex report is a weekly report from the Commodity Futures Trading Commission (CFTC). It provides information on the number of positions held by different types of traders in the futures market. COT data is collected at the close of Tuesday’s trading session and published on Friday evening. The CFTC strictly adheres to the principle of transparency and ensures that the data in the reports is accurate.

We will discuss in more detail what COT, Net Positions, and Reportable Positions are and how to read the Commitments of Traders report below.

Understanding COT Report Categories

The Commodity Futures Trading Commission divides all market participants into three main groups:

1. Commercial traders. Their main activity is business, and they use futures to protect their profits against possible changes in currency or commodity prices.

2. Non-commercial traders. They are also known as institutional traders. They are not interested in physical commodities and trade currency and other futures in large volumes to influence the price movement of an asset and profit from it.

3. Non-reportable. This group includes retail speculators.

As a rule, traders pay particular attention to the first two groups.

Commercial Traders and Hedgers

Commercial traders are entities involved in the production, merchandising, and processing of commodities. These market participants primarily use futures markets for hedging and seek to reduce risk by gaining access to valuable information.

For example, a rice producer can use futures contracts to hedge against fluctuations in the price of the crop due to adverse weather conditions. The producer buys rice futures contracts, thereby securing the selling price. Even if the price of rice falls later, the producer will still receive the agreed-upon price in the futures contracts on the exchange.

Non-Commercial Traders

Non-commercial traders include financial institutions, hedge funds, and independent traders. They are also referred to as large speculators or institutional investors. Unlike commercial traders, speculators seek to profit from price changes rather than hedge risks. Their income comes from successful trading operations, including currency futures trading.

Imagine that a hedge fund expects that, due to the forecasted cold weather in the winter, the price of natural gas in Europe will rise. It takes a long position on TTF gas futures on the ICE exchange. If the forecast proves accurate and the price of gas rises, the fund will profit from the trading signal.

Non-Reportable Traders

Non-reportable traders, also called small speculators or retail traders, are an integral part of the futures markets. These are market participants whose deposits and transaction sizes are too small to be included in the group of large speculators.

How to Read COT Report Data

COT reports provide information about the positions of various participants in the futures markets and market sentiment. This data can provide insight into trader positions, market sentiment, and whether a trend is likely to continue or reverse.

You need to know how to read Commitment of Traders report in order to use this information correctly. First and foremost, you should understand that effective COT analysis is a three-step process.

Access to Commitment of Traders Report

COT reports can be found in two different ways:

1. On the official website. Find the Market Data & Economic Analysis section and choose Commitments of Traders. Select the type of report (Legacy, Supplemental, Desaggregated, or TFF) and the short or full format. Select the market, commodity, or currency futures you are interested in.

2. On news and trading platforms. For example, Bloomberg, Reuters, TradingView (a variety of technical indicators and visualizing reports), FinViz, BarChart, and Tradingster.

Interpretation of Data

Each COT forex report contains several key columns that offer insight into various types of traders’ positions. So, how to read a COT report? There are several points worth paying attention to:

• Long positions — the number of contracts that traders have agreed to buy in the future.

• Short positions — the number of contracts traders have agreed to sell in the future.

• Changes from the previous week — how the number of open long and short positions has changed over the week.

• Open interest — the total number of outstanding futures contracts for a commodity. In other words, the number of contracts held by traders in the market.

How to Read COT Report

After downloading the COT forex report, refrain from jumping to conclusions about market sentiment. First, you need to learn how to read the COT report properly.

Commercial traders hedge their trading positions against future price fluctuations using the futures market. Since commercial traders are the primary drivers in the market, they have access to information on current commodity or currency futures prices. For example, they know about the price of a commodity or currency futures contract at a given moment. For example, they obtain information about a decrease in harvest, a drop in oil production, etc. Therefore, they benefit from opening positions against the trend in order to ensure price stability for their products.

Non-commercial traders, on the other hand, seek to conduct a thorough analysis and profit from the rise or fall in the price of an asset. This group often has access to information unavailable to retail traders, such as insider information. Moreover, large traders understand the market situation better than other participants because they have access to enormous resources. As a result, if the volume of their buy positions increases, the price will rise, and the upward trend will most likely continue; vice versa.

Small speculators have limited information, rush into decisions, and therefore most often open positions against the trend. According to statistics, their trend analysis is the least effective. If the volume of positions held by retail traders is particularly high in a certain direction, it is most likely necessary to act in the opposite direction. Forex trading should be conducted against the prevailing crowd sentiment.

Let’s consider the following COT forex report and analyze it below.

The report shows that the number of long positions held by institutional traders significantly exceeds the number of short positions. Speculators, as we have found, often support the trend and follow it.

Commercial traders mainly hold short positions — they hedge against growth and bet against the trend. Open interest is high and has not changed significantly since the last report.

We can also see that the growth in the number of long positions held by large speculators significantly exceeds the growth in the number of short positions. The decline in long positions held by commercial traders significantly exceeds the decline in short positions.

This data allows us to make a COT report analysis and draw the following conclusions:

• Non-commercial traders have information that the upward trend in the euro may continue, so they are increasing their long positions and are holding significantly more of them than short positions.

• Commercial traders are doing the opposite: they are mainly holding short positions, hedging against the primary trend. The reduction in long positions compared to short positions only reinforces these assumptions.

• Open interest is high and has changed insignificantly over the week.

• The COT forex report suggests the upward movement in the euro futures price is likely to continue in the medium term.

COT Report Trading Strategies

Now that we know how to read the Commitment of Traders report, let’s find out how to use this data to build a profitable strategy. Based on the COT, you can create several long-term trading strategies. Like most strategies in Forex trading, they imply trading either with the trend or against it.

Confirming Trends with COT Data

First, you need to learn how to read the COT report correctly. Let’s now describe the COT report trading strategy.

Let’s take a look at the gold (GC) futures market at the beginning of 2024 and apply the COT indicator to the chart. The COT indicator is one of a number of very useful tools that help traders to interpret information.

We can see that between January 8 and February 12, the number of long positions held by non-commercial traders gradually decreased. The green line declined smoothly on the chart. Then, from February 12 to March 4, the number of long positions remained roughly the same. From March 4, there was a sharp increase in long positions. The green line began to increase. This may indicate a resumption of the upward trend in gold prices.

Let’s check this assumption by analyzing the actions of commercial traders. Since commercial traders mainly hedge their positions with futures, we need to see an increase in their short positions to confirm the uptrend. Between February 12 and March 4, the number of their short positions decreased, and the COT indicator’s red line rose. However, on March 4, traders began selling, and the red line declined again.

An analysis of the COT report and a trading strategy has revealed that speculators are bullish, while commercial traders are bearish. Their actions confirm this assumption, and we can conclude that it is time to open long-term long positions. As we can see, the upward movement gained momentum, sustaining until October 28, 2024.

Identifying Potential Market Reversals

We all want to catch the top or bottom of the market. To do this, we need to observe a sharp change in market conditions. For example, if the price is rising and the number of long positions held by speculators is falling, this may indicate that the upward price movement is about to run out of steam.

Let’s take a look at the gas futures (NG) chart for 2021.

Between April 5 and August 30, the number of long positions held by commercial traders grew steadily. The price also rose. However, between August 30 and October 4, commercial traders began to sharply reduce their long positions. Meanwhile, the price continued to reach new highs. Is something wrong here? Perhaps the market is approaching its peak, after which a decline will follow.

In order to confirm this, we need to see hedge funds start buying, hedging against future price declines. Using the COT indicator, it can be seen that after reaching extreme values on August 30, hedge funds’ short positions began to decline, and the green line of the indicator began to rise. As a result, hedgers were unable to break through the minimum value of short positions on August 30. Thanks to our trading strategy, we have identified a trend reversal, and you can open a sell position. After reaching a high of 6,466 in October, the price reversed and dropped by 47% from its high to 3,416 in less than three months.

Conclusion

COT reports are a powerful tool for analyzing the futures market in medium- and long-term trading strategies. By tracking changes in the number of buy and sell positions held by large traders, it is possible to confirm the current trend and find early signs of a reversal.

Trading based on COT reports is not a standalone trading system. The reports only provide a general overview of the market and global trends. To find an optimal entry point, you need to use other Forex indicators and technical analysis tools.