Value Derivation from COT Report

Value Derivation from COT
It is a fact that COT report will give lot of information about trading. Many traders prefer this report and many are not giving importance to it. But in real, market is based on selling and buying process and is purely not based on the number of traders in the market field.
From this it is clear that we have to make focus on over sold and over bought details than number of traders in the market. Other important factor we have to consider is the percentage of interest for both short and long and to compare it with the total interest.
Importance of Number
Most traders will fall in the trap because the will consider raw numbers in the COT. According to experience traders the long interest variations from 50,000 contracts to 70,000, then it is clear that marketing is moving to over bought.
As the market is moving up the chances are there to increase of numbers also according to it. But here the question is what will happen if both long and short interest increases. In such conditions it is not possible for us to say that market is overly bullish.
A trader must be able to analyze proportion of both short and long interest. Also have to find the long positions and short position percentage. Getting the knowledge of percentage of the open interest for both long and short is the method to check the sentimental play in the market.