For each . From the time the buyer or seller opens the contract until the counter-party closes it, that contract is considered ‘open’.
Open interest applies primarily to the futures market, it helps the measure the flow of money into the .
In , open interest indicates the intensity of trading in a financial instrument. From analysts view increasing .
Therefore, to determine the total open interest for any given market we need only to know the totals from one side or the other, buyers or sellers, not the sum of both.
The open interest position that is reported each day represents the increase or decrease in the number of contracts for that day, and it is shown as a positive or negative number.
From this assumption, one could conclude that the present trend will continue. Analogously, declining open interest implies that the market is liquidating, and suggests that the prevailing price trend is coming to an end. A common misreading is that open interest is the same thing as the .
The relationship between the prevailing price trend and open interest can be summarized by the following
Price Open Interest Interpretation
Rising Rising Market is Strong
Rising Falling Market is weakening
Falling Rising Market is Weak
Falling Falling Market is strengthening