OPEN INTEREST AND VOLUME THEORY

2022年12月3日

Hello Mates good afternoon, So I choose open interest and volume theory for today's research because whenever we want to talk about trading the first thing comes into our mind is volume because it is the only thing which also followed the price and it is must be followed thing for price action and for breakout traders too. So like in equities there are Volumes likewise there are Open Interest in F&O ( Futures and Options) I hope we all are familiar with this which we can use for taking trades and positions so here are few examples which I found sharing below with all of you.

1- Price, Volumes and Open Interest are all up so we can expect a Bullish trend because these all three indicating Long buildup in a particular security or scrip and will follow by the Trend too.

2- Price Up volumes and Open Interest both are going down so we can expect that this is a short covering ( the trade has been earlier shorted and in order to square of their positions) So from this we can expect weakness is coming for a specific time in Uptrend.

3- Price Down and Volumes and Open Interest are going up it means there will be Short buildup are in progress in a particular scrip or in trade so it indicates weak Trend could come.

4- Price Volumes and Open interest all are going down in any scrip or trade it means that the trend has become weak and the Long positions from market are Unwinding.

So this is all, I hope this information will be useful to all of you. Regards and Good luck for coming trades and investments..