If you have been buying stocks and have not heard about the Commitment of Traders Report, then it’s probably that you are a new investor. But if you are aware and still don’t give it any thought, then you may be missing out on one of the best market indicators out there. Whether you prefer technical analysis or fundamental analysis, you have to pay attention to this easy to understand report in order to have the opportunity to spot major trades it exposes. This report is always available free and scores very high when predicting trades that will help you rake in a lot of profits from your investment. Some people have doubted the legality of insider trading. In essence, all insider trading that pass through the CFTC is considered legal and includes not only currency reports but commodities, bonds, and stocks as well. There are three groups of participants that benefit from the Commitment of Traders Report:
* The small spectators (made up of the majority of the market forces who intend to make profit out of trading)
* Large spectators (these are the groups that hold large positions with large sums. They are made up of net worth individuals and large fund managers)
* Commercials (these groups are the owners of the commodity or stock they are trading and are always interested to hedge their position in the futures market.
In the stock market, prices are not constant and fluctuate at all times. These price fluctuations are a result of emotions of fear, hope, and greed. These price spike rallies up and then bounce back to its normal position. An investor or trader than can identify the price spikes caused by fear and greed will make a lot of money for himself. And with the information from the Commitment of Traders Report, one can correctly identify when there is temporary price spike and when a heavy movement is about to occur.
To be able to use the COTR effectively, you have to understand the roles of the three players in the market. The commercial traders are the dominant force in the market because they control large conglomerates and have certain inside information that might not be available to other types of investors. Overall, understanding how to use the Commitment of Traders Report will help you spot trends when they are forming. This will ensure that you maximize your profit and prevent the risk of investing in a spiky market.
The COTR is also heavily watched in the commodities market were a lot of futures are traded. It’s really important to watch what the large and small speculators are going if you are doing any gold investing. There are many people who keep their eyes on this report.
If you want good updates on new stock market and gold buying strategies keep your eye on this link about stock trading strategies. It can keep you up to date on what new methods traders are working on.