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Commitment of Traders Example

This chart shows how long, versus how short, big traders are versus commercials or insiders. Data for these charts comes from a weekly report from the government's CFTC (cftc.gov). Traders that trade more than a threshold must report how long and short they are to the CFTC. There are always two different kinds of insiders, buyers and sellers. This chart for the crude oil futures, has the drillers that sell crude and the refiners that buy crude. The top chart contains the data directly from the CFTC report. The bottom chart puts this data into an index so the changes in the lines are more visible. The big traders tend to be trend followers. They make money within the trend but are always wrong when the trend ends because they will buy at highs and sell at lows. By contrast the insiders are always right, buying at lows and selling at highs. In the chart below, the insiders (or commercials) were at an extreme level of shorting between "1/28" and "3/24". Look how this pushed the crude oil market down for more than five months.