10 Ethereum contracts, they can both close the position, triggering a sell order and a buy order . OI will decrease by 20 contracts, because both Jim and Suzie closed their positions.In the equities market, open interest data can be found from sources like CME group, Barchart.com, Investopedia, OCC, Nasdaq and more.
: provides open interest data for long/short ratio, taker buy/sell volume, and top trader long/short ratio for crypto futures contracts: provides open interest statistics for BTC perpetual and future contracts, as well as aggregated open interest charts for individual contracts on different exchanges
It's important to note that different sources may provide different data, so it's a good idea to compare multiple sources.The previous example shows a clear difference between open interest and. After all, when Jim and Suzie closed their positions, volume went up by 10 contracts, whereas open interest went down by 20 contracts. Therefore, it is important not to confuse the two terms.
If Jim would have sold his 10 Ethereum contracts to a new trader entering the market, open interest would be unaffected – because the 10 active contracts are transferred from Jim to the new entrant. However, this transaction would still increase trading volume by 10 contracts.As an accurate barometer of market activity, open interest is a great tool to add to your toolbox. If open interest is low, it means there are few market participants, and therefore liquidity is expected to be low.
However, if open interest grows too high, traders tend to consider it a warning of a potential trend reversal, because it suggests the trade is getting overly crowded.Studying open interest can help you decipher the strength of price movements, or to analyze divergence and ascertain if the market is bearish or bullish. Most traders operate under the following assumptions:
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