Follow Institutional Trading with the COT Indicator

The Commitment of Traders (COT) Financial Futures Report is published by the CFTC to help the public understand market dynamics.

As the name suggests, the report offers a unique view into market sentiment segmented by the commercial or non-commercial status of market participants. This data can help traders of all types better understand institutional vs. self-directed trader sentiment. Released every Friday at 3:30 pm ET, the COT report contains position data supplied by clearing members, futures commission merchants, and foreign brokers from each Tuesday’s open.

See how traders use the COT indicator in this short video:

How Do You Get COT Data?

To plot the COT indicator in the NinjaTrader platform, simply enable the download of COT data in your platform settings.

• Go to Tools, then select Options
• Select the Market Data category on the left,
• Check “Download COT data at startup”,
• Click OK, and restart NinjaTrader.

Note — COT data download must be enabled to view the COT indicator.

Since the COT reports are updated weekly, the most current data will continue to plot forward until new data is available. After the new report is released on Friday at 3:30 pm ET, NinjaTrader will need to be restarted to download the updated data. If you decide to use COT in your trading, be sure to restart NinjaTrader weekly!

How Do You Get COT Data?

To add the COT indicator to a NinjaTrader chart:

• Right-click on any chart window and select Indicators
• Find the COT indicator from the top left list and double-click it
• Click OK to display the indicator

The COT indicator is able to display 1–5 plots at a time from a single instance of the indicator for many U.S. futures instruments. By default, it loads 4 plots with some of the most frequently used report fields.

The default plots are:

• Open Interest — displayed in yellow
• Non-Commercial Positions — displayed in blue
• Non-Reportable Positions — displayed in green
• Commercial Positions — displayed in red

The default settings for the COT indicator displays 4 lines on one panel.

Modifying the COT Display

As shown above, the Open Interest plot typically has a value much larger than the others and it may be preferable to plot Open Interest on its own.

To do this, double-click on the COT indicator and:

• As shown above, the Open Interest plot typically has a value much larger than the others and it may be preferable to plot Open Interest on its own.
  To do this, double-click on the COT indicator and:
• Change COT 1 to the Open interest Field
• Adjust plot colors and values as desired
• Add another COT indicator from the left list
• Set the number of COT plots to 3

Now you will have a chart with Open Interest on its own panel and the net position report fields on its own panel to increase visibility.

COT can be plotted on 2 panels to make the positions plots easier to read.

Using the COT Indicator for Trading

COT data is often used to compare which market participants are long vs. short. Long positions plot as positive on all of the 3 market participant lines. Short positions plot as a negative line. This gives you a quick view of which participants are trading bullish or bearish.

Viewing bullish and bearish positions across commercial and non-commercial entities is straightforward.

Many traders look for crossovers in market participants’ plots to see when commercial or non-commercial traders reverse their positions. This is often accompanied by a change in market direction. This makes the COT indicator a great long-term trend confirmation tool. Combining COT with classic technical indicators such as moving averages, and trend measurement tools like Fibonacci retracements help traders form their bearish or bullish bias and inform their overall trading strategy.

On this chart, a bullish crossover of the commercial positions line and bullish 12-week SMA are in agreement. Notice that the first commercial bearish crossover afterward did not end the long-term bullish trend. The second commercial bearish crossover coincided with another 12-week SMA cross, and price action pulled back.

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