Here's why I say that. I have been using the COT reports since 1970, wrote the first book ever about the reports, “Trading with the Insiders” (Wiley, 2005), and have taught more people how to profit with this report than anyone else.
Just about all of the other people out there talking about the COT reports learned about them from me or students of mine. No one, and I mean no one was writing about these reports when I first began discussing and trading with them in 1970.
My first lesson from the insiders...
I first learned about the importance of the Commitment of Trader Reports from Bill Meehan. Bill had been a member of the Chicago Board of Trade, and in 1969 revealed the basic secrets of these reports to me. I invented some ways to make it easier to see the impact of these guys buy making mechanical indicators with the data. I've been using them for 37 years now and think you'll find them to be invaluable tools.
WHAT THE COT REPORTS TELL YOU
The report is issued on Thursday evenings by the Commodity Futures Trading Commission. What it does is break down the amount of buying and selling done by three groups: Commercials, Large traders, and Small traders.
In other words, you really can find out each week exactly what the big guys have been doing in the marketplace... but it's not quite that easy. Let me explain why.
The largest powers in the marketplace are the Commercials. These are the large users and producers of the commodity. They do not use the commodity markets to speculate or directly make money in the markets. They are producers and users of the commodity, so they sell forward or hedge their production/demand. They use the markets for selling and delivery, not speculating.
The Large Traders are the second most dominant figure in the report. These are not quite what you think. They're not just large traders like me. They are nowadays, for the most part, commodity funds that are trying to speculate directly in the market.
Finally, they're the small traders, probably people like you… people who are trading in smaller amounts; the average trader. Interestingly enough, sometimes their record is very good while at others it is a disaster.
HOW TO USE THIS INFORMATION
Despite what you may have read from other traders (people who only looked at it for a few years), it is not a black-and-white situation. Just because the Commercials, the largest players in the marketplace, have been buyers does not mean a market will rally. How can that be true?
Let’s say you are a Commercial in Sugar. You need sugar to make candy. If the price of Sugar goes down; you will buy Sugar. In fact the more it declines, the more sugar you will buy in the futures markets now, for delivery later on when you will be making candy.
Your main concern is how much the sugar in your candy costs. As a Commercial you don’t care much about what price will do… no… you care about buying so you can take delivery and whip of a bunch of Taffy to sell for a profit.
THE COT INDEX EXPLAINED
Study this much and you'll run across something called the COT Index or Commercial Index. Most of the followers of the Commitment of Trader Reports now use this index... it's something I began doing in 1972. That's why I think it's fair to say I've been using this data longer than anyone else out there. Another fellow who's been using it a long time, almost as long as me is Steve Briese. He's a great guy and understands the COT report better than the rest.
In fact, because of Steve and me we still have the Commitment of Trader Reports... a year ago the Government tried to get rid of the report. Steve and I pressured them with our subscribers and friends enough that report has continued.
WHAT TO LOOK AT
Using the COT index is not about chart reading or any of the mystical stuff called technical analysis. It's plain and simple, as you can see in the above chart of Gold --- when the red line is high and above 80% --- the Commercials have been doing a lot of buying, and prices usually rally. By the same token, when the line is low --- below 20% --- they been doing a lot of selling and prices usually decline. Look at the $ potential in those moves!
Is this the type of indicator you are looking for to help your trading and investment decisions?
Let me show you another way of using it…
In this next chart we're looking at the Commercials Net Position in Soybeans. Please look at the black horizontal line in the Commercial panel (red line indicator). When the red line is above the black it means the Commercials have been doing more buying than they have selling.
This is where it gets tricky and were I suspect I can help you the most. It isn't just a question of the Commercials being long or short, but how massively long or short they are. Notice the buy point in 2003 was evidenced by one of the largest Commercial long positions in years… and a rally that produced over $26,000 profit on a $1,500 investment!
Look at how high their Net Position was at the start of 2005… and again how this forecast a move of over $11,500 per contract, which had a $1,500 margin requirement.
Also note that when the Commercials Net Position was low, with the largest selling positions in years, as it was at the first of 2004, it warned of the ensuing bear market with a profit potential of over $17,000 per contract.
Shortly after the start of 2007 the Commercial Index made a multi year low, and Beans plummeted.
I use this data in a variety of ways… many more than what I'm showing here. I teach it in my commodity trading course, Cracking the Money Code. I've learned a little bit more about how to use it correctly in the last 10 years because as I said, it is an art and does need to be understood in relationship of the current price structure. That's exactly what I can teach you.
A FUNNY STORY --- Last year I was interviewed by a newspaper reporter about the COT report. Just like you, he saw how powerful it was so he started researching the data by running a bunch of numbers in a computer and then coming up with a new career for himself. He now has a COT report and is already on the Internet!
But sad to say, his predictions have not been very good, because all he did was crunch numbers. He DOES NOT understand the significance of the interplay of the Commitment of Trader Reports and that the Commercials are not speculators. He has all the numbers but none of the experience and understanding. That’s what I can offer you…YEARS OF EXPERIENCE. Go to the source to get the best information.
Here's what a few of my students have said about what they've learned from me.
Thank you for all your precise books and commentary. I have finally profited from the futures market. I feel confident that I will continue as long as I am trading. Of all the books and financial writers I've read you are by far the BEST!!!
Thank you. - K.S.
FINALLY--- after 6 years of trying to win at this silly game.... I don't know what snapped, but Finally, I feel like i've got it. I've been on a winning streak recently, doubled my $10,000, in 6 weeks -- by the way, nearly all of my ideas have stemmed from the things i learned from you. THANK YOU - V. G.
Had an awesome morning today I just closed out my biggest trade to date with $3,112.50 in Coffee (real-money). My wife thought I should write and tell you thanks. For a farm kid that is a lot of money for 5 minutes of work (and a lot of preparation). It would of took me about two months to make the same doing hard physical work in this hot idaho sun. - Ronnie
I cannot believe it. I made $200,000 today for me and my clients. This is like winning in the lottery. Today I love you all! - Manfred
Larry, Just a word of encouragement. Your books and information are by far the most powerful available to mankind. I know because I seen the others. This trading is now my life thanks to you. I just don't know anywhere else where you can see your net worth soar to new heights so quickly and have the odds in your favor... - James
Well, I guess the question now is up to you. There are several ways I can help you take advantage of the COT reports:
1. Buy my book Trading with the Insiders. That will get you started. Trade
Stocks & Commodities with the Insiders. This book is
based on my work with the COT report that began
in 1970. You will learn who the Commercials are, how
they use the markets, and how you can use what they do
to stack the odds in your favor.
This book literally
shows you what the Insiders are doing with real money
and how you can follow their action. This is the first
book ever written on this subject and will substantially
improve your understanding of why markets do what they
do. Forget technical analysis, Insiders move the markets
and now you can move with them!
The book is $34.99 and that includes shipping if you are a US customer
Trade
Stocks & Commodities with the Insiders
2. Get my Cracking the Money Code course… it is really dirt cheap, only $249 which includes a three month subscription to my Commodity Timing newsletter… that’s a $200 value itself. This gives you two things... a profitable newsletter, as well as superior education about the Commitment of Trader Reports. Click HERE to read more about Cracking the Money Code.
If you want to continue your educational journey and learn even more ways to use and apply the COT report data to trading, then enroll in the Larry Williams University. Purchasing Cracking the Money Code qualifies you as a "student" and you will receive significant discounts by following our curriculum. To read more about the Larry Williams University, click HERE.
Cracking the Money Code DVD Course
3. If you're an active trader and you just want to take my trades than subscribe to Commodity Timing. A three-month trial is $200. You can check my trading record for the newsletter, which is featured on our web site. This is record is kept by an independent third party, not myself. So you know, these are real trades, nothing has been fudged. Click HERE to read about Commodity Timing.
I don't know of any other advisory service that does this, shows a track record. Most don't even show their track record... because most, between you and me, have never made money for subscribers.
Commodity Timing Newsletter
Why trust the Johnny-come-latelies, would be COT crowd? They don't know what I know... they have not been trading as long as I have, they haven't made millions of dollars in real time, really trading the markets. I'm the only guy out there that has really done that. Yes, I have made millions of dollars numerous times trading, largely thanks to the Commitment of Trader Reports… and what I know about them.
I hope can do the same for you and I hope I can help you understand and profit from this information.
Buy my book Trading with the Insiders. That will get you started. Trade
Stocks & Commodities with the Insiders. This book is
based on my work with the COT report that began
in 1970. You will learn who the Commercials are, how
they use the markets, and how you can use what they do
to stack the odds in your favor. 
Get my Cracking the Money Code course… it is really dirt cheap, only $249 which includes a three month subscription to my Commodity Timing newsletter… that’s a $200 value itself. This gives you two things... a profitable newsletter, as well as superior education about the Commitment of Trader Reports. Click 