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Investing in Commodities, Tip 22: Consider the COT Report


The Commitment of Trader report is one of the most valuable resources that commodity investors can use. Here's why.

The Commitment of Trader report, or COT for short, is one of the most valuable resources that commodity investors can keep up with on a regular basis. The COT report is published on a weekly basis, every Friday afternoon, by the Commodity Futures Trading Commission and it shows where large speculators, commercial, and small traders have placed their bets in terms of open interest information. This report allows you to gauge how different market participants are positioned across currencies, stock indexes, as well as commodities, offering a high level overview of the general sentiment in the market.

The only limitation of the COT report is the fact that it's based on open interest information from the previous Tuesday, which inherently makes it three days late. Nonetheless, the information offered can still be used to gauge the overall sentiment in the market, offering valuable insights to investors and financial advisors alike.

Bottom Line: The COT report can offer valuable insights for your trades.

This article is part of the series "Tips for Investing in Commodities." See also:

Tip 1: Futures Do Not Equal Spot

Tip 2: Commodities and Dividends Can Align

Tip 3: Watch Your Tax Rates

Tip 4: China Can Make or Break You

Tip 5: Low Inventories Can Lead to Backwardation

Tip 6: Diversification Is Not a Given

Tip 7: Rolling Front Month Futures Is a Recipe for Disaster

Tip 8: More Than Just Energy and Gold

Tip 9: Watch Out for That K-1!

Tip 10: Consider Expenses Always

Tip 11: Commodity Exposure Through Stocks: Pros & Cons

Tip 12: Know What You're Getting Into

Tip 13: Consider Physical Exposure

Tip 14: Commodity ETFs: Structure Matters

Tip 15: Bigger Does Not Mean Better

Tip 16: Commodity ETFs Get a Bad Rap

Tip 17: Beware the Dollar's Impact

Tip 18: Not All Commodities Are Created Equal

Tip 19: Know Your Geography

Tip 20: Be Mindful of Your Timing

Tip 21: Platinum and Palladium Are the Other Precious Metals

Tip 23: Remember That You Also Have Options

Tip 24: NAGS Vs. UNG -- Different Tools for Different Objectives

Tip 25: Free Resources Can Make Your Life Easier

Follow us on Twitter @CommodityHQ!

Editor's note: This article by Jared Cummans was originally published on Commodity HQ.
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