COT 101 · Lesson 01 — How to Read the COT ReportGold FuturesCOMEX_DL:GC1!ConfluenceEdge_🔵 THE THREE GROUPS 1) Commercials — the hedgers. Producers and consumers of the physical commodity. A gold miner selling futures to lock in a price, a farmer protecting his harvest, an airline fixing fuel costs. They are not in the market to speculate. They are insuring a business. This is why the name: hedgers. 2) Non-commercials — the big speculators. Hedge funds, CTAs, managed money. They have no interest in the physical metal. They are trend followers: they buy strength and sell weakness, and their positions grow as a move matures. 3) Small traders (nonreportable) — everyone below the CFTC's reporting threshold. Often called "dumb money" — but that is lazy thinking. In thin markets, this bucket can simply hold small commercials who never reached the reporting size. Judge them case by case, not by label. 🔵 WHY COMMERCIALS AND NON-COMMERCIALS ARE OPPOSITES This is the single most important sentence in the whole report: the two large groups are structurally on opposite sides — and you read them exactly that way. The hedger sells strength (locking in good prices) and buys weakness (securing cheap input). The speculator buys strength and sells weakness (riding the trend). So when commercials are heavily short, they are usually short INTO strength — and that is not bearish, it is business. When non-commercials are heavily long, they are long INTO strength — and that is not confirmation, it is momentum at its most crowded. Same report, same week, two opposite readings. Mixing them up is the classic beginner error. 🔵 THE NET NUMBER Forget raw long and short. What matters is net: longs minus shorts. One line per group. A rising commercial net means hedgers are covering shorts or adding longs — institutional supply is shrinking. A falling non-commercial net means the trend-following crowd is bailing out — often the first sign a move is exhausting. 🔵 WHY THE CHART MATTERS The COT report measures futures positions. So the price series it explains is the futures contract — for gold, that is GC1! (COMEX), not a spot or CFD feed. If you overlay COT data on a CFD chart, you are explaining one market with the positioning data of another. Next lesson: why commercials are the side you actually want to follow — and where the "smart money" label really belongs. Educational content only. Not investment advice.