The short answer
On FX it is the most consistent result we have outside US indices, but it is not proven. Betting against leveraged funds at a 1-year extreme in the weekly CFTC report and holding about two weeks made +0.01R a trade in 2021-23 and +0.10R in 2024-26 on seven USD pairs; every nearby setting was positive and following the crowd lost in every year. But it trades only about 25 times a year and random sides matched the result 40% of the time. On gold and silver it failed. We are forward-testing it without trading it.
What we tested
- Markets
- EURUSD, GBPUSD, USDJPY, AUDUSD, USDCAD, USDCHF, NZDUSD; XAUUSD, XAGUSD
- Period
- 2021-23 to find, 2024-26 to judge
- Speculators' net position as a share of open interest (leveraged funds for currencies, managed money for gold and silver), from the CFTC's free weekly report.
- When it is the most long (short) of the past 52 weeks, sell (buy) the market from the Monday after the report; stop 2 x ATR(20), flat after about two weeks.
Results
| Market group | 2021-23 | 2024-26 |
|---|---|---|
| Seven USD pairs | +0.006R (n 68) | +0.095R (n 65) |
| Gold and silver | +0.128R (n 20) | -0.133R (n 20) |
| Extreme of | Hold 1 week | Hold 2 weeks | Hold 4 weeks |
|---|---|---|---|
| 26 weeks | +0.058 / +0.116 | +0.032 / +0.173 | +0.090 / +0.258 |
| 52 weeks | +0.045 / +0.065 | +0.006 / +0.095 | +0.057 / +0.053 |
| 104 weeks | +0.051 / +0.124 | -0.000 / +0.385 | +0.097 / +0.287 |
What it means
- Following the crowd instead (buying what speculators are most long) lost in every year from 2021 to 2026.
- By year: 2021 +0.00R, 2022 +0.28R, 2023 -0.17R, 2024 -0.00R, 2025 +0.21R, 2026 +0.10R.
Limits of this test
- About 25 trades a year across seven pairs: too few to separate a small edge from luck.
- The settings overlap heavily, so their agreement is less independent than it looks.
Frequently asked questions
Can the COT report be used to trade forex?
Fading 1-year speculator extremes in the COT report was consistently positive on seven USD pairs in 2021-26 in our test, but with about 25 trades a year the result is not statistically proven; it failed on gold and silver.
How every test on these pages works
- Prices: the broker's own bars from an FTMO cTrader account. Fills are simulated minute by minute on one-minute bars; when one minute touches both the stop and the target, the stop is assumed to fill first.
- Costs: the broker's bid/ask spread measured by hour of day, commission per market, and the broker's own overnight swap rates for anything held past the daily rollover.
- Periods: year 1 = 24 Oct 2024 to 23 Oct 2025, year 2 = 24 Oct 2025 to 24 Oct 2026. Daily rules also use Dec 2020 to Oct 2024 ("2021-24"). Rules are written down before testing and are not tuned on the period that judges them.
- Controls: every rule is compared with entries that have no reason behind them (random sides, random days, or the same rule at fake levels), so a result has to beat chance, not just be positive.
- R is the trade's risk (entry to stop). An average of +0.10R means the average trade made a tenth of what it risked; -0.10R means it lost a tenth.
The full results for the rules RezSync Algo trades, by market and risk profile with every trade downloadable, are in the backtest report.
Related research
Research, not financial advice. These are simulated results on historical prices: they involve no real money, are produced with hindsight of the rules, and past results do not predict future ones. Costs and fills are modelled, and your broker's prices and costs will differ. Trading leveraged products carries a high risk of losing money; test on a demo account first.