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The Commitment of Traders (COT) Report + Open Interest Indicator Strategy for Long-Term Trading

Last Updated on March 18, 2025 by Arif Chowdhury

Have you ever felt lost in the sea of trading strategies?

Wondering how to manage risk while maximizing profits?

Or maybe you’re just tired of the endless cycle of trial and error?

As a seasoned Forex trader since 2015, I get it.

The market can be overwhelming.

But let me share something that has really turned my trading around: the Commitment of Traders (COT) Report combined with the Open Interest Indicator.

This strategy is a game-changer for long-term trading.

Understanding the COT Report

The COT Report is published weekly by the Commodity Futures Trading Commission (CFTC).

It provides insights into the positioning of traders in the futures market.

This report breaks down traders into three main categories:

  • Commercial Traders: These are hedgers, like farmers or oil companies, who use futures to protect against price changes.
  • Non-Commercial Traders: This group includes large speculators, such as hedge funds, who are looking to profit from market movements.
  • Retail Traders: This is the average Joe, like you and me, who typically follow trends without the same insights.

Why Does This Matter?

In my experience, understanding where big money is positioned can give you a significant edge.

When commercial and non-commercial traders diverge in their positions, it often signals a potential reversal.

A few stats for you:

  • Historically, non-commercial traders have been accurate in predicting market trends about 70% of the time.
  • The COT Report can help identify overbought or oversold conditions, giving you the upper hand.

The Role of Open Interest

Now, let’s sprinkle in the Open Interest Indicator.

Open interest tells you the total number of outstanding contracts in a particular market.

When open interest increases, it indicates that new money is entering the market.

Conversely, a decline suggests that money is leaving.

Here’s why combining these two is powerful:

  • Rising Open Interest + Price Increase: This often confirms the strength of a trend.
  • Rising Open Interest + Price Decrease: This could indicate that the downtrend has strength.
  • Declining Open Interest + Price Increase: This might suggest a potential reversal.

How I Use This Strategy

Incorporating the COT Report with the Open Interest Indicator into my trading routine has been a game-changer.

I focus on the following:

  • Analyze COT Data: Look for divergences between commercial and non-commercial traders.
  • Monitor Open Interest: Check for trends that align with COT signals.
  • Set Up Trades: Use this data to make informed entries and exits.

This strategy has led me to develop my exceptional portfolio of 16 trading bots.

Each bot is designed to trade using various strategies, including the COT + Open Interest approach.

These bots are diversified across four major currency pairs: EUR/USD, GBP/USD, USD/CHF, and USD/JPY.

Why My Trading Bots Stand Out

Here’s the kicker:

  • Multi-layered Diversification: Each currency pair has 3-4 bots working independently, minimizing correlated losses.
  • Long-Term Performance: They focus on trades that aim for 200-350 pips, ensuring they thrive in the long run.
  • Robust Backtesting: I’ve tested these bots over the past 20 years, and they perform excellently even under harsh conditions.

And the best part?

I’m offering this entire EA portfolio for FREE.

You can check it out and get started by visiting my trading bots portfolio.

Wrapping Up with the Right Brokers

So, what’s the next step?

You need a solid broker to implement these strategies.

I’ve tested several, and I recommend the best ones for a superior trading experience.

These brokers stand out due to:

  • Tight Spreads: Lower trading costs.
  • Fast Execution: Get in and out of trades quickly.
  • Outstanding Support: You’re never left in the dark.

If you’re ready to take your trading to the next level, check out my recommended brokers here: best forex brokers.

Final Thoughts

The combination of the COT Report and the Open Interest Indicator is not just theory; it’s practical.

It can help you make informed decisions and enhance your trading strategy.

By leveraging this approach, along with my trading bots, you can navigate the Forex waters with confidence.

Don’t leave your trading success to chance.

Dive into the data, trust the strategy, and let’s make those pips work for you!