How to interpret CFTC data of futures

The Commitments of Traders is a weekly report on contract positions routinely issued by the US Commodity Futures Trading Commission (CFTC). Published every Friday at 3:30 E.T., the COT report is a summary of the commitment of the classified trading groups as of the close on Tuesday that same week.

The report is divided into two parts: reportable positions and nonreportable positions. Among them, reportable positions include commercial positions and non-commercial positions. Commercial positions refer to positions held by commercial entities that use futures for hedging purposes, such as producers and merchants. Non-commercial positions refer to positions that aim at profiting from speculative purposes, such as money managers. Nonreportable positions refer to positions held by small speculators.

1. How is Futu's futures positions analysis calculated?

● Net Positions = Long Positions - Short Positions

● Weekly Change of Net Positions = This Week's Net Positions -  Last Week's Net Positions

● Change of Open Interest = This Week's Open Interest - Last Week's Open Interest

● Percentage Change of Open Interest = Change of Open Interest / Last Week's Open Interest

2. So how can we understand CFTC data? 

First of all, open interest data can be used to measure the activeness of the market. This data is obtained by adding up the values of all types of long, short, and spreading positions. This data shows the heat of market. The higher the value, the greater the number of participants in the market and the greater the amount of funds, which can be understood as a long-term positive signal for the corresponding asset. 

Secondly, the positions data of asset management institutions or money managers is very informative. Generally speaking, large institutions are the influencers of market trends. Such market participants can better predict market trends and conduct reasonable risk control before the arrival of real risks. Therefore, generally speaking, you can utilize the information to predict the market trend by tracking the positions of such entities.

In addition, compared to the change in long or short positions, the change in net positions can more intuitively reflect the change in market trends. The change of net positions direction (long/short) is also a very effective signal to judge the change of market trend.

The above content does not constitute any investment advice, please make your own judgment and invest with caution.