COT report

[imported_bingobazza]

How useful is it to use the COT report, specifically the behavious of the large speculators, to help to determine entry and exit points in commodity futures markets?

Bingo

[Sniper]

The Large Specs are generally the large commodity funds that are generally trend followers. Knowing their positions is considered helpful to traders in identifying trending markets.

The Commercials are dealers in the cash markets and are considered the "smart money" by many traders. Knowing their position is helpful in finding markets where the trend might have gone too far and large positions by the commercials are considered as indicators of over priced or under value markets. Changes in the net commercial position can be an important trend indicator WHEN CONSIDERED RELATIVE TO THE HISTORY OF THE RANGE OF THE NET COMMERCIAL POSITION.

CFTC Commitments of Traders (http://www.cftc.gov/cftc/cftccotreports.htm)

[imported_bingobazza]

So large specs growing positions can indicate a strong trend while commercials growing positions can indicate a change in trend? Is that right Sniper?

[Sniper]

My best understanding about those who use this information, is that they look at the changes relative to both recent and long term history. I have seen a couple of trading systems that use COT info as the primary basis for trading signals.

I'll see if I can find a better writeup by someone using this data in their system and post it.