How to read a CFTC Commitment of Traders report
Quick answer
The CFTC Commitment of Traders report breaks down futures positioning into three groups: Commercials (hedgers — considered 'smart money'), Non-Commercials (speculators), and Non-Reportable (small traders). Read it by comparing net positioning across groups. When commercial net positioning reaches an extreme, it often precedes a price reversal in the underlying commodity.
What the COT report shows
The Commodity Futures Trading Commission (CFTC) publishes the Commitment of Traders report every Friday at 3:30 PM ET. It's one of the few publicly available datasets that breaks down futures market positioning by trader type — giving you insight into who is buying and who is selling.
The report covers every futures market regulated by the CFTC: commodities (oil, gold, corn, cattle), financials (Treasuries, S&P 500, Eurodollars), and currencies. For each market, it decomposes open interest into three categories.
The three trader categories
Commercials (hedgers)
These are producers, consumers, and intermediaries who use futures to hedge real business exposure. Oil producers selling futures to lock in prices. Airlines buying jet fuel futures. Gold miners hedging production. Commercials are considered 'smart money' because they have direct knowledge of supply/demand fundamentals.
Non-Commercials (large speculators)
These are hedge funds, CTAs, and other managed money that trade futures for profit, not hedging. Their positioning reflects speculative sentiment — bullish or bearish bets on the direction of the market.
Non-Reportable (small traders)
Positions too small to meet CFTC reporting thresholds. Generally considered 'dumb money' — retail traders and small speculators. Contrarian indicators sometimes use extreme small-trader positioning as a signal.
How to read positioning extremes
The most valuable COT signal: when commercial positioning reaches an extreme relative to its historical range. Extremely net-long commercials in a commodity often precedes a price rally (the fundamentals-informed players are accumulating). Extremely net-short commercials often precedes a decline.
The opposite for speculators: extremely net-long non-commercial positioning is a contrarian bearish signal (too much speculative optimism), and vice versa.
Building COT charts in Quadesto
Download the CFTC's weekly release (or connect via API). Upload the CSV with columns for date, commercial_long, commercial_short, noncommercial_long, noncommercial_short.
Quadesto can compute net positioning (long - short) as a derived column, then chart it as a time series. Overlay commercial and speculative net positioning on the same chart to see the divergences — when commercials are net long and speculators are net short (or vice versa), it's a potential turning point.