>>"There are so many forex traders that follow a particular way of forex trading and in the end don't succeed in the main goal of making money. This is because their ego, pride and determination to succeed at a particular method has the effect of blinding them to other forex trading money making opportunities..

95% of traders fail - who is to blame? Bad luck? The Markets? No.

Trading success has nothing to do with luck - it has everything to do with YOU. If you don’t want to learn and are not prepared to put in any effort, you won’t win at forex trading. If you want to make money in life it requires you learn skills.

The good news is that if you apply yourself and learn the correct knowledge, you can learn the skills you need to succeed quickly and easily.."

Forecast Forex Movements Using COT Report

What do we mean by COT report, after all? And why is it so prominent an indicator used in the forex trade market? COT stands for Commitments of Traders and the report is drawn down by the Commodity Futures Trading Commission which is a detailed information report in the futures market on positions and volumes of contracts. The COT report assumed a position of high importance for its elaborate enumeration of the contracts which basically helped the shot term speculators, which generally is the case, in the forex market fairly accurately.

The COT report is not meant for exclusive use of foreign exchange market nor is that dedicated to it. The report lists out the prevailing condition in the futures market, about the contracts, whether the net contracts were long or short. The considerations are for commercial, non commercial and open interest while giving detailed figures of number of traders in each category, the spread and percentage of open interest etc. The report also includes the same positional data for different foreign exchange currencies.

How to Use This Cot Report?

The fundamental thing to understand while reading the COT report is that the commercial positions are not as much relevant as non commercial positions are for the simple reason that they are predominantly traded in the spot currency market. So, it is wise for a trader to concentrate more on the non commercial market positional data more for reliability in capturing the trade positions.

Forex traders must be concentrating on 3 major areas in the COT report to base their trading decisions.

1. Positional Flips in the market are assumed to be accurately trending.
2. Identification of market reversals through the help of extreme positions has been historically accurate.
3. Strength of a market trend is better judged by the changes in the open interests.

What Do We Infer By This Discussion

Before we go on to summarize the article we need to look at the down side of the COT report too. It does not throw much light on the volumes which is the back bone of the spot trading market. But traders have more or less turned towards the futures market which compensates for this lack of volume data.

Analyzing the three key areas in the COT report, which is released on each Friday, is essential although it contains data till the previous Tuesday only.


 
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