The Commitments of Traders (COT Report) has several key terms you need to understand before you can read the report. The key terms are, Open Interest, Reportable Positions, Commercial and Non-commercial Traders, Non-reportable Positions, Spreading, Changes in Commitments from Previous Reports, Percent of Open Interest, Number of Traders, Old and Other Futures, Concentration Ratios, and Supplemental Report.
Concentration Ratios (long form only) – The report shows the percents of open interest held by the largest four and eight reportable traders, without regard to whether they are classified as commercial or non-commercial.
The concentration ratios are shown with trader positions, which are computed on a gross long and gross short basis and on a net long or net short basis.
The “Net Position” ratios are computed after offsetting each trader’s equal long and short positions.
Therefore a reportable trader with relatively large, balanced long and short positions in a single market may be among the four and eight largest traders in both the gross long and gross short categories, but will most likely not be included among the four and eight largest traders on a net basis.
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