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The COT Report (How To Use/Strategies) Bonus

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OANDA:EURUSD   Euro / U.S. Dollar
How To Use The COT Report In Your Forex Trading
Before we discuss how to trade the Forex market using the COT Report, you should know why the COT Report is important for Forex traders.

Forex trades are executed over-the-counter (OTC). There is no central body, like NYSE, where all trades are recorded. It is difficult to accurately track volumes behind all Forex trades. It is also harder to know what big banks, large speculators, and other market drivers, are doing. But with the COT report, Forex traders can have an insight into these pieces of info. Which brings us to first use of the COT report in FX.

Trading Strategy 1: COT Report as a Forex volume indicator
The COT report can serve as a powerful Forex volume indicator when you use it rightly. Since CFTC releases the weekly report every Friday for all trades recorded before Tuesday, you can only use it for long-term trades. To use the COT Report as a volume indicator, keep your eyes on the open interest numbers of an asset. When there is a rise in the open interest of an asset, it means more people are trading the futures contract of the asset.

Trading Strategy 2: Using the COT Report to predict reversals
There are two ways to use the COT report to spot potential reversals in the Forex market. The first method is the use of the spreads data on the report. A reversal may occur when the spread between commercial and non-commercial traders is wide. If the commercial traders are going heavily bullish while the non-commercials are heavily bearish , the market could experience a reversal to the uptrend. And if commercials are going short while non-commercials are going long, a reversal to the downtrend may occur. The other method involves noting where the non-commercial traders are accumulating their positions. Remember that non-commercial traders are the big money guys that are interested in making more money. They are the ones you want to mimic.

So, when you find that their positions on a certain futures contract are reversing, and a reversal might be imminent on the underlying asset. This use of the COT report is similar to how you might use a sentiment indicator, such as the Current Ratio FXSSI indicator, in a Forex sentiment analysis. To get better results, you can use the data from the COT report to complement your technical analysis from other Forex trading tools. good luck.