Can data from the Commodity Futures Trading Commission (CFTC) give you a Trading edge?
The simple answer is YES. But before we go into the 'How', let understand 'What' the CFTC data is and 'Why' it exists.
Frist released in 1962, the Commitments of Traders (CoT) report provides breakdown of each Tuesday's open interest for a range of markets (including Currencies, Energies and Metals etc).
Released every Friday by the Commodity Futures Trading Commission (CFTC) the report outlines how three (3) distinct trader groups are positioned equal to or above the reporting levels established by the CFTC. That is, the amount of buying the selling done by three groups of trader types.
These trader groups include:
- Large Commercial Institutions (Producers and Hedgers)
- Large Non-Commercials institutions (Large Funds and Large Traders)
- Non-reportables (Small Speculators)
Non-commercial traders are large speculators such as Hedge funds. Speculators place trades with the direction of the anticipated price.