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What is the Best Forex Broker in UK?

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UK residents usually prefer brokers regulated by the Financial Conduct Authority (FCA), the main regulatory body for financial services in the UK. The FCA ensures that brokers adhere to strict guidelines, providing security and protection for traders.

Traders from the UK prioritize the security of their funds. Reputable brokers often segregate client funds in separate accounts from their operational funds and provide additional protection through compensation schemes, such as the Financial Services Compensation Scheme (FSCS), which can compensate eligible traders in case of broker insolvency.

What is the Best Forex Broker in the UK?

The best forex broker in the UK is Avatrade because of its competitive spreads, multiple trading platforms, and excellent UK support. Avatrade was announced as the best broker in the UK in 2022 by World Business Stars Magazine.

VISIT AVATRADE

AVA Trade EU Ltd is incorporated in Ireland, which is closely related to the UK.

See my personal avatrade dashboard clear and simple:

my personal avatrade trading dashboard

Avatrade is the best Forex broker in the UK for several reasons. Firstly, the company offers highly competitive spreads, meaning traders can keep more profits. Secondly, Avatrade provides multiple trading platforms, ensuring traders can access the latest technology and trading options.

 

But what sets Avatrade apart from its competitors is its excellent UK support. The broker’s customer service team is dedicated to helping traders with any issues. The team is available 24/7, providing traders with peace of mind that they can get help whenever needed.

Another reason Avatrade is the best Forex broker in the UK is its regulation. The company is incorporated in Ireland, closely related to the UK. This means it adheres to the strict regulations set out by the UK Financial Conduct Authority (FCA), ensuring that traders can trade safely and confidently.

UK payment service Skrill you can use in the Avatrade dashboard:

Avatrade payment methods

Avatrade Regulation

When choosing a reliable and trustworthy forex broker, regulatory oversight is a crucial factor to consider. AvaTrade, a well-established online trading provider, takes regulatory compliance seriously. This article provides a comprehensive overview of the regulatory bodies that oversee AvaTrade’s operations in different regions worldwide. Understanding the regulatory framework helps traders make informed decisions and ensures higher security and protection.

Regulatory Oversight by Region:

  1. Ava Trade EU Ltd – Central Bank of Ireland: Ava Trade EU Ltd operates under the regulatory oversight of the Central Bank of Ireland, with registration number C53877. The Central Bank of Ireland is renowned for its stringent regulatory standards, ensuring a transparent and fair trading environment.
  2. Ava Trade Markets Ltd. – B.V.I Financial Services Commission: Ava Trade Markets Ltd. is regulated by the British Virgin Islands Financial Services Commission. The B.V.I FSC ensures that AvaTrade adheres to regulatory guidelines, safeguarding clients’ interests.
  3. Ava Capital Markets Australia Pty Ltd – ASIC: Ava Capital Markets Australia Pty Ltd is regulated by the Australian Securities and Investments Commission (ASIC) with registration number 406684. ASIC is a reputable regulatory body known for its strict supervision of financial services in Australia, providing a secure trading environment for Australian traders.
  4. Ava Capital Markets Pty – South African FSCA: Ava Capital Markets Pty is regulated by the South African Financial Sector Conduct Authority (FSCA) with registration number 45984. The FSCA oversees financial markets and ensures that AvaTrade operates in compliance with the regulatory standards in South Africa.
  5. Ava Trade Japan K.K. – Financial Services Agency and Financial Futures Association of Japan: Ava Trade Japan K.K. is licensed and regulated in Japan by the Financial Services Agency (License No.: 1662) and the Financial Futures Association of Japan (License No.: 1574). These regulatory bodies maintain strict oversight of financial services in Japan, promoting investor protection and market integrity.
  6. Ava Trade Middle East Ltd – Abu Dhabi Global Markets Financial Regulatory Services Authority: Ava Trade Middle East Ltd is regulated by the Abu Dhabi Global Markets (ADGM) Financial Regulatory Services Authority (FRSA) with registration number 190018. The ADGM FRSA ensures that AvaTrade adheres to regulatory standards and maintains high levels of financial integrity in the Middle East region.
  7. DT Direct Investment Hub Ltd. – Cyprus Securities and Exchange Commission: DT Direct Investment Hub Ltd. operates under the regulatory oversight of the Cyprus Securities and Exchange Commission (CySEC) with registration number 347/17. CySEC is known for its comprehensive regulatory framework, offering protection and transparency for traders in Cyprus and the European Union.
  8. ATrade Ltd – Israel Securities Authority: ATrade Ltd is regulated in Israel by the Israel Securities Authority with registration number 514666577. The Israel Securities Authority oversees the Israeli financial markets, ensuring ATrade complies with local regulations.

AvaTrade Features

AvaTrade understands that every trader is unique and therefore offers a variety of trading platforms for both manual and automated trading. These platforms are designed to be user-friendly, feature-rich, and accessible across multiple devices, ensuring traders can trade anytime, anywhere.

Let’s explore some of the platforms preferred by traders in the UK:

  1. WebTrader: AvaTrade’s award-winning WebTrader is a proprietary platform that requires no download. Its user-friendly and intuitive interface has become a favorite among many UK traders. WebTrader provides access to a wide selection of instruments, including cryptocurrencies, along with various analytical tools, indicators, and charts.
  2. AvaTradeGO: AvaTradeGO is an intuitive mobile app for traders who prefer to trade on the move. It offers a user-friendly interface, advanced trading features, and charts that work seamlessly on smartphone screens. As a result, the app enables traders to stay connected and manage their trades conveniently.
  3. MetaTrader 4 (MT4): Regarded as one of the most popular trading platforms worldwide, MT4 provides a powerful and flexible trading environment. It is suitable for beginners and advanced traders, offering automated trading through Expert Advisors (EAs) and a wide selection of order types. Traders can also access various analytical tools and customize their trading strategies.
  4. MetaTrader 5 (MT5): Building upon the success of MT4, MT5 is the next generation of the MetaTrader platform. It offers advanced trading capabilities, a broader range of technical analysis tools, various order types, multiple timeframes, and graphical objects. MT5 also introduces an all-new coding language and supports automated trading.
  5. AvaOptions: For traders looking to express their market view through options trading, AvaOptions is a comprehensive platform. It allows traders to trade Vanilla Options and provides embedded tools to maximize returns. In addition, avaOptions empowers traders to customize their options strategies and manage risk effectively.
  6. MetaTrader 4 for Mac: Catering to Mac users, AvaTrade offers a version of MT4 optimized for the Mac interface. Mac users can seamlessly enjoy the powerful features of MT4 on their devices, ensuring a smooth trading experience.
  7. AvaSocial: AvaSocial sets a new standard in social trading technology. Through the AvaSocial mobile app, UK traders can follow and copy the trades of successful traders. In addition, the app allows traders to tap into the wisdom of experts, ask questions to mentors or groups, and discover new and robust trading strategies.

In conclusion, if you are looking for the best Forex broker in the UK, look no further than Avatrade. With its competitive spreads, multiple trading platforms, excellent UK support, and regulation by the FCA, Avatrade offers traders everything they need to succeed in the Forex market.

VISIT AVATRADE

What is the Best Forex Broker for Scalping?

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Scalping is a trading technique that involves taking small profits on many trades. It is a popular trading technique among forex traders because it can generate consistent profits. Scalpers aim to profit from small price movements in the forex market, and they do this by executing trades quickly and frequently. The goal is to make several small profits that add to a significant profit.

One factor that scalpers take into consideration when choosing their trading instruments is the spread. The spread is the difference between the bid price (the price at which a trader can sell a currency pair) and the asking price (the price at which a trader can buy a currency pair). A low spread is ideal for scalpers as it means they can enter and exit trades at a lower cost, increasing their profits.

Low-spread forex brokers are popular among traders who employ scalping strategies. Low-spread brokers offer tight spreads, meaning the difference between the bid and ask price is minimal. This is particularly advantageous for scalpers, as it allows them to execute trades quickly and with minimal slippage. A low spread also means traders can enter and exit trades more frequently, increasing their profit chances.

Pure ECN accounts in the forex industry do not exist anymore. All most all brokers are market makers, and they use a combination of ECN STP brokerage.

But what should scalpers do?

 

What is the Best Forex Broker for Scalping?

The Best Forex Brokers for scalping are HF Markets and Exness because they offer Zero Spread accounts. Additionally, these brokers are rare brokers that allow scalping strategies and do not prohibit expert advisors’ scalping systems.

VISIT HFM

Below you can see proof from the HF Markets website where they allow scalping:

scalping allowed at hfm broker

 

 

HF Markets ECN account low spread for scalping Table

Currency Pair Limit and Stop Levels SpreadTypical ZERO Spread
EURUSD 20.1
USDJPY 20.2
GBPUSD 20.4
EURGBP 20.4
USDCAD 20.6
EURJPY 20.8
USDCHF 20.8
AUDUSD 20.8
CADJPY 20.9
EURCHF 20.9
AUDJPY 21
NZDUSD 21
USDSGD 51
USDHKD 71.1
EURCAD 21.2
CADCHF 31.3
GBPJPY 31.4
AUDCAD 21.4
NZDJPY 21.4
AUDCHF 21.5
CHFJPY 21.6
EURAUD 21.6
GBPCHF 31.8
AUDNZD 31.9
GBPCAD 31.9
EURNZD 32
GBPAUD 32.3
ZARJPY 32.3
NZDCHF 32.3
NZDCAD 32.3
EURDKK 103.3
GBPNZD 44.5
USDDKK 35
USDCNH 25.4
EURPLN 206.8
USDSEK 209
USDTRY 59.6
USDPLN 209.8
USDHUF 5012.5
USDCZK 2012.6
EURNOK 2014.1
EURCZK 3015
USDNOK 2015.5
EURHUF 2018.4
USDZAR 5029
EURZAR 355
USDRON 7060
EURRON 8070
GBPZAR 580
USDRUB 200810
  1. Zero Spread Account: This type of account typically refers to a Forex account where the difference between the bid price and the asking price (the spread) is zero. This implies that trades can be executed at the exact market price. Usually, brokers compensate for zero-spread accounts by charging a commission on each trade.
  2. Low Commission Rate: USD 0.03 per 1K lot is lower than many brokers charge. A lot in forex trading is a unit measuring the trade size, and one standard lot is typically 100,000 units of the base currency. So, in this case, the commission refers to the fee charged by the broker for a trade size of 1000 units of the base currency.

HF Markets, also known as HotForex, is a well-known forex and commodities broker. Below are some benefits associated with HF Markets:

  1. Variety of Trading Instruments: HF Markets offers various trading instruments such as forex, commodities, indices, shares, bonds, and cryptocurrencies.
  2. Multiple Trading Platforms: They provide various platforms for trading, including MetaTrader 4, MetaTrader 5, and their proprietary HF App for mobile trading.
  3. Educational Resources: HF Markets provides a variety of educational materials for traders, including webinars, e-courses, video tutorials, and market analysis. This can be particularly beneficial for novice traders.
  4. Regulatory Oversight: As of 2021, HF Markets is regulated by multiple financial authorities globally, providing a layer of security for traders.
  5. Customer Service: They have a reputation for good customer service, providing 24/5 customer support.
VISIT HFM

ENC Scalping Account

Exness is another well-known forex broker offering various accounts, including a zero-spread trading account. Here’s a general breakdown of the specifications you provided:

  1. Zero Spread Account: In Exness’s zero spread account, the spread, which is the difference between the bid price (the price you sell at) and the asking price (the price you buy at), starts from 0. This means that trades can be executed at the exact market price without the typical difference between buying and selling prices that many brokers include.
  2. Commission: The commission on this account starts from 0.2 USD per lot per side. In forex trading, a “lot” is a standardized unit of a particular currency pair, and one standard lot is usually 100,000 units of the base currency. So, in this case, if you were to buy or sell one lot of a currency, you would be charged a commission of 0.2 USD.
  3. Minimum Deposit: The minimum deposit to open this account type is 200 USD. This is the smallest amount you need to deposit into your trading account before you can start trading.

Below you can see a zero spread account from the Exness webpage:

Exness zero spread account

Exness offers several advantages:

  1. Variety of Trading Instruments: Exness offers various trading instruments, including forex, metals, cryptocurrencies, energies, indices, and stocks.
  2. MetaTrader Platforms: Exness provides MetaTrader 4 and MetaTrader 5, both famous and sophisticated trading platforms that offer advanced charting tools, trading robots, and the ability to handle multiple orders.
  3. Competitive Spreads: Exness is known for offering competitive spreads on various currency pairs, which benefits traders.
  4. High Leverage: Exness offers high leverage, which, while risky, can significantly increase potential profits if trades go well.
  5. Regulation: Exness is regulated by several financial authorities, including the Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA) in the UK, which provides an additional layer of security for traders.
  6. Customer Support: They offer robust customer support, assisting 24/7 in multiple languages.
  7. Education and Research: Exness offers various educational resources, including training courses, webinars, tutorials, and market analysis.

VISIT EXNESS

Conclusion

Scalping is a strategy that requires discipline, experience, and the right tools to succeed. Low-spread forex brokers provide an ideal environment for scalping, as they offer tight spreads that allow traders to execute trades quickly and frequently. While scalping can be challenging, the potential profits that can be generated make it an attractive trading technique for forex traders.

In my opinion, scalping is too risky. However, you should use Zero S spread accounts if you use scalping strategies to reduce commissions.

What is The Best Forex Broker With Low Spread and No Commission?

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The importance of low spread cannot be overstated. It can make or break a trade, particularly for those who engage in scalping and day trading. The tighter the spread, the less the trader pays on every trade, resulting in higher profits. Even a few pips difference in the spread can significantly impact a trader’s bottom line over the long run.

Moreover, tight spreads also imply greater transparency in the trading process. Low-spread brokers typically have greater liquidity and are more efficient in handling orders. As a result, they provide traders with faster execution, which is crucial in the forex market, where a few seconds of delay can make all the difference. This means that traders can enter and exit trades at a more favorable rate, leading to greater profitability.

 

What is The Best Forex Broker With Low Spread and No Commission?

HF Markets is the Best broker with a low spread and no commission because it offers zero-spread accounts with only $0.03 per 1k lot commission. Additionally, Capital.com offers the lowest spread of 0.00006 without a commission.

VISIT HFM

Check HF markets spreads:

Currency Pair Limit and Stop Levels SpreadTypical ZERO Spread
EURUSD 20.1
USDJPY 20.2
GBPUSD 20.4
EURGBP 20.4
USDCAD 20.6
EURJPY 20.8
USDCHF 20.8
AUDUSD 20.8
CADJPY 20.9
EURCHF 20.9
AUDJPY 21
NZDUSD 21
USDSGD 51
USDHKD 71.1
EURCAD 21.2
CADCHF 31.3
GBPJPY 31.4
AUDCAD 21.4
NZDJPY 21.4
AUDCHF 21.5
CHFJPY 21.6
EURAUD 21.6
GBPCHF 31.8
AUDNZD 31.9
GBPCAD 31.9
EURNZD 32
GBPAUD 32.3
ZARJPY 32.3
NZDCHF 32.3
NZDCAD 32.3
EURDKK 103.3
GBPNZD 44.5
USDDKK 35
USDCNH 25.4
EURPLN 206.8
USDSEK 209
USDTRY 59.6
USDPLN 209.8
USDHUF 5012.5
USDCZK 2012.6
EURNOK 2014.1
EURCZK 3015
USDNOK 2015.5
EURHUF 2018.4
USDZAR 5029
EURZAR 355
USDRON 7060
EURRON 8070
GBPZAR 580
USDRUB 200810

In my experience, you will get the best low spreads for EURUSD and GBPUSD  forex pairs and gold. HF Markets and Capital.com offer excellent low spreads for gold. For example, Capital.com offers only a 0.3 spread for gold spots.

Capital.com low spread

spread commission for capital.com and comparison

Low spread commission is a term used in financial trading to refer to the difference between an asset’s buying and selling prices. It represents the cost that traders incur when executing trades. Capital.com is a trading platform that offers competitive low spreads on various financial instruments, and here are the detailed spread commissions for some specific assets:

  • Gold Spot: The spread commission for trading Gold Spot on Capital.com is 0.3. This means the difference between gold’s buying and selling prices is 0.3 units of the base currency (such as USD).
  • US Wall Street 30 (USA 30, Dow Jones): The spread commission for trading the US Wall Street 30 index (USA 30 or Dow Jones) on Capital.com is 2. This indicates that the difference between the buying and selling prices of the index is 2 points.
  • Euro / Canadian Dollar: The spread commission for trading the Euro against the Canadian Dollar on Capital.com is 0.00022. This means that the difference between the buying and selling prices of the currency pair is 0.00022 units of the base currency (such as EUR).
  • Euro / US Dollar: The spread commission for trading the Euro against the US Dollar on Capital.com is 0.00006. This indicates that the difference between the buying and selling prices of the currency pair is 0.00006 units of the base currency (such as EUR).
  • US Dollar / Japanese Yen: The spread commission for trading the US Dollar against the Japanese Yen on Capital.com is 0.01. This means that the difference between the buying and selling prices of the currency pair is 0.01 units of the base currency (such as USD).
  • Crude Oil Spot: The spread commission for trading Crude Oil Spot on Capital.com is 0.03. This indicates that the difference between crude oil’s buying and selling prices is 0.03 units of the base currency (USD).
  • Germany 40: The spread commission for trading the Germany 40 index on Capital.com is 1.5. This means that the difference between the buying and selling prices of the index is 1.5 points.
  • Australian Dollar / US Dollar: The spread commission for trading the Australian Dollar against the US Dollar on Capital.com is 0.00006. This indicates that the difference between the buying and selling prices of the currency pair is 0.00006 units of the base currency (such as AUD).
  • Apple, Inc: The spread commission for trading Apple, Inc. (the well-known technology company) on Capital.com is 0.05. This means that the difference between Apple’s stock’s buying and selling prices is 0.05 units of the base currency (such as USD).
  • France 40: The spread commission for trading the France 40 index on Capital.com is 1.3. This indicates that the difference between the buying and selling prices of the index is 1.3 points.
VISIT CAPITAL

Please check our detailed article about low-spread brokers.

In conclusion, the low spread is undoubtedly one of the most critical factors traders consider when selecting a forex broker. Tight spreads provide traders with more opportunities to make profitable trades while promoting greater transparency and efficiency in the trading process. Therefore, traders must do their due diligence and choose a low-spread broker for their profits and overall performance.

What is The Best Forex Broker with No Minimum Deposit? – Low Deposit Broker

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CFDs are derivative products that enable traders to profit from the price movements of assets like currencies, stocks, commodities, and indices, without actually owning them. When trading CFDs, traders agree with the broker to exchange the difference in the price of an asset from the time the contract is opened to when it is closed. This means that traders can potentially profit from both rising and falling markets.

One significant advantage of trading CFDs is accessing the markets with a relatively low deposit. Forex brokers often offer leverage, which allows traders to control more prominent positions with a fraction of the total trade value. For example, a broker might provide leverage of 1:100, which means that for every $5 the trader has in their account, they can control a position worth $100. This leverage amplifies both potential profits and losses, so it should be used with caution and proper risk management.

HFM broker several payment options

To trade CFDs with a low deposit, traders typically need to open an account with a forex broker that offers such an option. In addition, some brokers provide micro or cent accounts, allowing traders to start with a minimal deposit. Depending on the broker, these accounts may require deposits as low as $10 or even less. However, it’s important to note that trading with very low deposits may limit the available trading options and features, and the leverage provided might be lower compared to standard accounts.

What is The Best Forex Broker with No Minimum Deposit?

HF Markets is the best forex broker with no minimum deposit, where traders can deposit money starting from $5. However, some payment methods, such as wire transfers, require at least $100 because of high bank fees. On the other hand, e-payment methods (Skrill, Neteller, Bitcoin) enable traders to make low deposits with negligible costs.

VISIT HFM

Many brokers will tell you that they offer no minimum deposit. Still, in practice, you cannot make some payments without at least $5 because of transaction fees: especially credit cards payment and some e-payment methods. You can learn more about HF markets payment duration in our article.

 

See Low Deposit Brokers Table:

Forex broker ReviewVisitMin. deposit

HFM		VISIT HFM$5

Avatrade		VISIT AVATRADE$5

XM.com		VISIT XM$5

Instaforex		VISIT INSTAFOREX$10

Alpari.com		VISIT ALPARI$10

Exness Reivew

VISIT EXNESS$10

Roboforex		VISIT ROBOFOREX$10

Capital.com		VISIT CAPITAL$20

Low deposit brokers, as the name suggests, are forex brokers that allow traders to start trading with a relatively small amount of money. In addition, these brokers have lower minimum deposit requirements compared to traditional brokers, making them more accessible to individuals who have limited funds to invest in the forex market.

HF Markets is an example of a forex broker offering no minimum deposit requirement. This means traders can deposit as little as $5 to open a trading account. This feature is particularly beneficial for beginners or those who want to test the waters of forex trading without committing much capital upfront.

However, it’s important to note that while HF Markets itself may not impose a minimum deposit, specific payment methods, such as wire transfers, may have their requirements due to high bank fees. In this case, a minimum deposit of $100 is required. Again, the payment method, not the broker, sets this requirement.

best hf markets broker for mt4

To overcome this limitation, e-payment methods such as Skrill, Neteller, and Bitcoin can be utilized. These methods often have lower fees than traditional bank transfers, allowing traders to make low deposits with negligible fees. With these e-payment methods, traders can deposit smaller amounts of money, including the minimum requirement of $1, without incurring substantial transaction costs.

Low deposit brokers allow individuals with limited funds to participate in forex trading; traders should be mindful of the risks involved. Forex trading carries inherent risks, and it’s essential to have a well-developed trading strategy, risk management techniques, and a thorough understanding of the market before engaging in live trading, regardless of the deposit amount.

VISIT HFM

 

COT Report Trading Strategy – COT Report USD & COT Report Gold!

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The Commitments of Traders (COT) trading report, a treasure trove of insights, reveals the positioning and sentiments of significant participants, enabling astute investors to decipher the trends that shape the gold market.

COT report analysis from charts from website

Like a backstage pass to the financial arena, the COT trading report lifts the curtain on the strategies employed by commercial, non-commercial, and non-reportable traders. Among these groups, commercial and non-commercial traders take center stage, dictating market movements and potentially heralding dramatic price reversals.

As you navigate the COT report, you’ll uncover the intricate dance between these market players. Analyzing their net positions – the difference between their long (buy) and short (sell) contracts – offers a window into prevailing sentiment. A substantial net part hints at a prevailing bias, and keen observers can discern signs of market exuberance or caution.

COT Report Trading Strategy

The COT Report Trading Strategy is predominantly a long-term position trading strategy that uses solid/weak currency determination and reversal COT report analysis. 

Please see my youtube video from Fxigor youtube channel, where I described in detail COT Report Trading Strategy:

Let us see COT Report Trading Steps image below:

cot report strategy steps

COT Report Trading strategy steps:

  • Begin by opening the primary Forex index COT reports for currencies such as the US dollar (USD), euro (EUR), Australian dollar (AUD), New Zealand dollar (NZD), and British pound (GBP). Use tradingster.com/cot
  • Analyze the COT charts to identify potential reversal points. Look for significant changes in positioning, extreme levels, or deviations from historical norms that may indicate a shift in market sentiment.
  • Open the daily charts for the major Forex pairs you are interested in trading.
  • Add a moving average (MA) of 100 or 200 periods to the daily charts. This helps identify the overall trend and provides additional confirmation for potential trade setups.
  • Determine the relative strength between currencies. Define which currency is weak and which is firmly based on the analysis of the COT report and other factors such as economic data and fundamental analysis.
  • Look to BUY the strong currency against the weak currency or SELL the weak currency against the strong currency. This allows you to take advantage of the perceived strength or weakness in the respective currencies.
  • Set your stop loss level based on the previous low or high on the price chart. This helps manage risk by defining the point at which you would exit the trade if the price moves against you.

Position traders aim to capture substantial price movements over extended periods, ranging from several weeks to months, by analyzing the data provided in the Commitments of Traders (COT) report.

The COT report offers a comprehensive overview of the positions held by various market participants, including commercial traders, non-commercial traders (speculators), and non-reportable traders. Position traders can gain insights into market sentiment and potential trends by studying the positioning and changes in these categories.

Given the nature of the COT report, released every week, the strategy suits traders with a longer-term outlook and willing to hold positions for extended periods. Position traders typically look for significant shifts in positioning, extreme levels, or changes that deviate from historical norms. These indicators may suggest potential turning points or reversals in the market.

Position traders combine the information from the COT report with other forms of technical and fundamental analysis to make well-informed trading decisions. For example, they may consider chart patterns, trendlines, support and resistance levels, and other indicators to validate their analysis and time their entries and exits.

How to analyze COT report?

To analyze the COT report for possible reversal moments using either the non-commercial and commercial overlap or maximum distance on the chart, you can follow these steps:

  1. Obtain the COT report: Access the latest COT report for the specific market you are interested in, such as futures contracts for commodities or currencies. The report is on the Commodity Futures Trading Commission (CFTC) website or through financial news platforms.
  2. Identify the non-commercial and commercial categories: The COT report categorizes traders into non-commercial (speculators) and commercial groups. Non-commercial traders are typically large speculators, such as hedge funds, while commercial traders consist of entities using the futures market for commercial purposes.
  3. Analyze positioning overlap: Focus on the overlap between non-commercial and commercial traders. Look for periods where their positions align or overlap significantly. This can indicate a convergence of sentiment and potential market turning points.
  4. Study maximum distance on the chart: Pay attention to moments where non-commercial and commercial positions are at maximum distance from each other. This indicates a divergence in sentiment, with non-commercial traders holding extraordinarily bullish or bearish positions compared to commercial traders. These moments can also suggest potential market reversals.
  5. Compare positioning with historical data: Examine the current positioning overlap or maximum distance on the chart in the context of historical data. Look for patterns or instances where similar positioning preceded price reversals in the past. This historical perspective can provide insights into the potential significance of the current positioning.

Let us see the image from the previous article, How to read COT report below:

how to read cot report

COT Report Trading Strategy EURUSD Example

First, we will analyze the bullish to bearish reversal on the US index COT report:

US Index COT report

Then, we will explore the bearish to bullish reversal on the EUR index COT report:

EUR index COT report

In the next step, we will check will this reversal can last. We want less than 90% of institutional traders to be in some direction if we have a a 100% to 0% long vs. short trend. See May 2023. COT report long vs. short:

institutional traders long vs short

Now we can see EURUSD daily chart.
We will have it at the end of 2022. very very strong EUR, bullish trend reversal, and weak US dollar. In that case, BUY EURUSD:

EUR USD chart daily

Gold COT Trading Strategy

In the context of the COT report for gold, “M Money” refers to the category that includes managed money or large speculators. These are typically hedge funds, commodity trading advisors (CTAs), and other institutional investors who engage in speculative trading.

Gold COT report

“Swap” refers to the category that includes the positions of swap dealers. Swap dealers are financial institutions that act as intermediaries in the derivatives market, facilitating transactions between different counterparties. They often use swaps to manage interest rates, currencies, or commodities risks.

In the COT report, the “M Money” and “Swap” categories provide insights into the positioning and sentiment of these specific types of market participants. Therefore, analyzing the positions and changes in these categories can help understand the behavior and potential impact of managed money and swap dealers on the gold market.

 

From October 2022. Gold is in a bullish trend. At the same time, the US dollar is in bearish mode. That means a solid bullish gold price trend from 1680 to 2036 in May.

Gold chart bullish trend reversal

Conclusion

The COT trading strategy is valuable for traders seeking to gain insights into market sentiment and potential trend reversals. By analyzing the positions of different market participants, mainly non-commercial and commercial traders, the COT report provides a snapshot of the prevailing sentiment and potential turning points in the market.

Combining the COT report for each separate currency, we can get excellent trading results using a weak/strong currency pair strategy.

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