READING THE COT REPORT
Plain English
The Commitments of Traders (COT) report shows what commercial hedgers, large speculators, and small traders are doing in every futures market. Following the smart-money positioning is a known edge.
Going deeper
Published every Friday by the CFTC, COT breaks down open interest by trader type as of Tuesday. Commercials (producers/users) typically take the opposite side of speculators and historically lead price reversals. When commercials reach historical net-long extremes (e.g., the most-bullish position in 3 years), it often marks intermediate bottoms. Conversely, extreme net-short positioning marks tops. Use COT alongside price action — it's a positioning indicator, not a timing tool. Tools: Barchart COT, Hightower, free CFTC raw data.
Examples
Crude commercial extreme
Commercials hit a 5-year net long in WTI in late 2020 — a multi-year bottom signal. Traders following COT positioned long; oil rallied from $40 to $120 over 18 months.
S&P speculator extreme
Large speculators reached a 3-year net long in ES at the early-2022 top. Within months, ES dropped 25% in the bear market. Crowded positioning often precedes reversals.