Open interest

What it is

Open interest is the number of futures or options contracts that have been opened and not yet closed. Volume counts every trade; open interest only rises when a new buyer and a new seller open a position, and falls when positions are closed.

The common reading pairs it with price. Price up and open interest up: new buying is driving the move. Price up and open interest down: shorts covering. Price down and open interest up: new selling. Price down and open interest down: longs getting out. This is a convention traders use, not a law, and sources word the last case differently.

It exists only for exchange-traded futures and options (and crypto perpetuals). Spot forex has none; the CME currency futures are the nearest thing.

How to spot it

• Most futures platforms and exchanges publish it daily; crypto exchanges show it live.

How to use it

• Treat a breakout with rising open interest as more likely to have new money behind it.
• Treat a sharp move with falling open interest as possibly just positions closing, which can fade once done.

Common mistakes

• Reading it intraday from a daily-only source.
• Treating the four-way table as certain.

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