The Commitments of Traders Bible: How To Profit from Insider Market Intelligence by Stephen Briese is a comprehensive guide to understanding and utilizing the Commitment of Traders (COT) data. Published in 2008, the book is recognized as one of the key texts for those interested in learning about the COT report.
The COT report is a weekly publication by the Commodity Futures Trading Commission (CFTC) that provides a breakdown of the open interest in futures markets, giving insights into the activities of different market participants. This includes commercial hedgers, large traders, and small speculators.
The book opens with a detailed overview of the COT report, explaining its structure, components, and the different classifications of traders. Briese goes into depth about how the report distinguishes between commercial and non-commercial traders and explains the speculative positions often taken by small traders.
Briese then delves into the key purpose of the book: how to utilize the COT report for trading. He discusses how the COT data can be interpreted as a sentiment indicator and a predictive tool for identifying market reversals. The author underlines the importance of analyzing changes in open interest and understanding the behavior of different trader groups.
Through numerous case studies and real-world examples, Briese illustrates how traders can gain an edge by understanding the market positions of large traders, particularly commercial hedgers. He offers strategies for using the COT data across various asset classes, including commodities, equities, currencies, and interest rates.
However, readers should be aware that while COT data can provide valuable insights, it should not be the sole basis for trading decisions. It is just one tool among many that traders can use to analyze market conditions and trends. It’s also important to understand that the information in the COT report is a week old when published, so it’s not a real-time indicator.