Sun. Jan 16th, 2022

Fxtriangle | Market analysis | Managed trading

Fxtriangle will make Fx trading look easy.

How to Pick Tops and Bottoms With the COT Report?

1 min read

The COT report shows how committed the large institutional “non-commercial” traders are to long or short positions within each currency pair.

It is worth noting that when the markets are rising, the non-commercial traders are buying, i.e., they are bullish. Conversely, the commercial traders (hedgers) are bearish when the markets are rising, meaning they’re actively shorting the futures contracts during a bullish market. Therefore, in a bullish market, when speculators continually go long as the hedgers keep shorting, a market top will form.

However, it’s almost impossible to predetermine a market top. The best way to spot a market top is to notice a reversal beginning to occur in the market when the spread between the commercial traders and non-commercial traders has widened.

When the market prices are falling, non-commercial traders are bearish while the commercial traders are bullish.

Therefore, a bearish market will reach the bottom when the non-commercial traders keep selling, and the commercial traders maximize their futures bullish positions.

The best way to spot a market bottom is to note a market trend reversing while the spread between the commercial traders and non-commercial traders has widened.

In short,

  • Tops (local highs) are areas in price movement, where price stops to rally and creates so cold U address opposite price direction.
  • Bottoms (local lows) are areas in price movement, where price stops to say no and creates so cold U address opposite price direction

Leave a Reply

Forex trading and any instruments related to Foreign Exchange Market are Speculative and carry substantial risk of loss of either partial equity or the entire deposit amount. Leverage adds up to the risk, before considering to invest in this venture, you should first consider your financial position and may seek the help of an independent financial advisor. FXtriangle dis-recommends the usage of loan instruments to trade in this market as it can hamper financial position. Please do not invest the money that you cannot afford to lose. FXtriangle provides all its services throughout the Globe Excluding (Nigeria, British Virgin Island & the Islamic Republic of Iran) and also provides limited service in some jurisdictions where investment in Overseas markets / Fx Exchanges are prohibited by Law If you are not sure to contact us before using any of our services. FXtriangle acts as an Independent Corporate Financial Advisor and connects you to various overseas exchanges and cannot be held liable for any financial damage occurring through their side. All of our partnered institutions are regulated in various jurisdictions.FXtriangle conducts an independent background check before partnering with any institutions to fulfill your investment objectives smoothly. The usage of our Business name, Logo or any trademark in any financial forum, website, review website, complaint arena, Billboards without our written permission will attract lawsuits.