Here at Babypips.com, there is a whole section available on COT report (Market Sentiment) - how to use, understand, interpret and create own COT report.
I have found a website which provides a comprehensive COT report of each currency along with it’s graphical presentation. It can be a great tool to add in your arsenal. If anyone has interest in COT report, he/she may look it at COT Reports and COT Charts, Legacy Reports, Futures Only.
Here is a screenshot showing only one part of the said report.
And here is a cheat sheet to use COT report.
Summary - Market Sentiment (Extract from School of Pipsology)
Remember, the COT report measures the sentiment of traders during a specific period of time.
Like every other tool in your toolbox, using the COT report as an indicator does not always correlate to market reversals.
So take the time to study this report and get your own feel of what works and what doesn’t.
Also, before we bring this lesson to an end, always keep in mind that market prices aren’t driven by solely COT reports, stochastic, Fibonacci levels, etc.
The markets are driven by the millions of people reacting to economic analysis, fundamental reports, politics, Godzilla attacks, UFO sightings, Lady Gaga concerts – life in general!
It is how you use these tools that will help you be prepared to what lies ahead.
In conclusion…
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As forex traders, it is our job to gauge what the market is feeling.
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One way to gauge market sentiment extremes is through the Commitment of Traders Report.
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By understanding the activities of the three groups of traders (commercial traders, non-commercial, retail traders), we can find ourselves in better positions to fish for tops and bottoms.
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Remember, every market top or bottom is accompanied by a sentiment extreme, but not every sentiment extreme results in a market top or bottom.