Using COT Report for Weekly and Daily Bias - ICT concepts

Introduction

This tutorial will guide you through using the Commitments of Traders (COT) Report to determine weekly and daily bias in your trading strategy. Understanding the COT Report is essential for traders looking to gain insight into market sentiment and make informed decisions. This tutorial is based on the ICT (Inner Circle Trader's) concepts, providing you with a practical approach to analyzing market data.

Step 1: Access the COT Report

• Visit Barchart.com.
• Navigate to the "COT Reports" section, typically found under the "Analysis" or "Reports" menu.
• Select the specific market or asset class you are interested in (e.g., commodities, currencies, etc.).
• Choose the correct report type:
  • Futures: For futures contracts.
  • Options: For options trading.
• Download or view the latest COT Report.

Step 2: Analyze the COT Data

• Identify three main categories of traders in the report:
  • Commercials: Hedgers who use futures to manage risk.
  • Non-commercials: Large speculators seeking profit.
  • Retail traders: Smaller speculators and individual traders.
• Focus on the net positions of each category:
  • Look for shifts in positions, such as increased long or short positions.
  • Pay attention to extreme positioning, which can indicate potential reversals or continuations.

Step 3: Determine Weekly and Daily Bias

• Assess the overall positioning of the commercials and non-commercials:
  • Bullish Bias: If commercials are net long and non-commercials are net short.
  • Bearish Bias: If commercials are net short and non-commercials are net long.
• For daily bias:
  • Compare the weekly COT data with daily price action.
  • Look for alignment or divergence between the COT Report and daily chart patterns.

Step 4: Incorporate the Analysis into Your Trading Strategy

• Use the bias from the COT Report to inform your entry and exit points:
  • Align your trades with the identified bias.
  • Look for confirmation from technical indicators (e.g., moving averages, RSI).
• Consider risk management:
  • Set stop-loss orders based on market volatility.
  • Determine position sizing according to your trading plan.

Conclusion

By utilizing the COT Report, you can gain valuable insights into market sentiment and make more informed trading decisions. Regularly analyze the report to stay updated on market dynamics, and integrate this analysis into your overall trading strategy for better results. Consider joining the community for ongoing analysis and trade setups to enhance your trading journey.