[MetaMasters] COT INDEX

The COT Index converts the weekly net positions of Commercial traders into a normalized, cycle-based mathematical model.

Rather than showing raw net positioning, the COT Index applies a cyclical normalization algorithm—most commonly over 26 weeks, with 52 weeks as an alternative. This process highlights bullish and bearish extremes in Commercial behavior more clearly. The resulting index is displayed as a color-coded line:

• Green Zone – Commercials classified as bullish.
Historically, strong Commercial buying activity often coincides with upward market pressure.

• Red Zone – Commercials classified as bearish.
This typically reflects increased downside pressure in the underlying market.

• Neutral Zone – No clear directional bias; positioning sits in the mid-range.

Because COT data is updated only once per week and the index is derived from multi-week cyclical analysis, the indicator is designed strictly for the weekly timeframe. Lower timeframes do not align with the structure or cadence of the underlying data.

The chosen cycle length (commonly 26 or 52 weeks) determines how net positions are compared and normalized, influencing how quickly the index reaches its extreme zones.

Overall, the COT Index offers an objective, systematic way to interpret Commercial trader sentiment and identify potential directional bias in the market.