Chapter 5
What is Open Interest (OI)?
Open position tracking and market participation
What is Open Interest (OI)?
Open Interest (OI) is the total number of open contracts in the futures market that have not yet been closed. The difference from trading volume is: volume measures the number of trades made in a day, while OI shows the total of positions that are currently actively open.
When a new buyer and a new seller create a contract, OI increases. When an existing buyer and an existing seller close their positions, OI decreases. When an existing position is transferred to someone else, OI does not change.
When a new buyer and a new seller create a contract, OI increases. When an existing buyer and an existing seller close their positions, OI decreases. When an existing position is transferred to someone else, OI does not change.
Why does Open Interest (OI) matter?
- Rising OI + Rising Price: New money is entering the market, trend is strengthening
- Rising OI + Falling Price: Short positions are increasing, downward pressure is strengthening
- Falling OI + Rising Price: Shorts are closing (short squeeze), sustainability is questionable
- Falling OI + Falling Price: Longs are closing (long unwinding), selling pressure may decrease
- Rising OI + Falling Price: Short positions are increasing, downward pressure is strengthening
- Falling OI + Rising Price: Shorts are closing (short squeeze), sustainability is questionable
- Falling OI + Falling Price: Longs are closing (long unwinding), selling pressure may decrease
How to use Open Interest (OI)?
OI Divergence: If OI is falling while price is rising, the trend is weakening (shorts are closing, no new buyers). This is a potential reversal signal.
OI Spike Alert: When you see a sudden OI increase in a coin, it means new positions are being opened. It should be evaluated together with price direction.
OI Spike Alert: When you see a sudden OI increase in a coin, it means new positions are being opened. It should be evaluated together with price direction.
This content is for education and analysis only, not investment advice. Market tools offer probability and context, not certainty; the decision is the user responsibility.