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Commercial (commodities) Trader

What does Commercial (commodities) Trader mean?

In futures markets, there are two types of traders: Commercial and Non-commercial Traders

A trader that uses futures contracts in a particular commodity for hedging as defined in CFTC Regulation. The trader is required to file a declaration to this effect. A commercial trader needs to be engaged in the business activities hedged by use of used the futures or option markets.

Futures Knowledge Explains Commercial (commodities) Trader

For example, if an oil company hedges oil futures, the oil company is classified as a commercial trader.   But if an investor buys or sells oil futures, he is not a commercial trader. He is a non-commercial trader. This classification is used in weekly report Commitment of Traders (COT) and is useful to analyze the market behavior. A trader may be commercial trader for one commodity but can be non-commercial for another commodity, depending on the trader’s business activities.

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