Open Interest Analysis For Futures Trading – Open Interest And Volume – Part 1

Published on April 23, 2019

Open Interest Analysis For Futures Trading – Open Interest And Volume – Part 1

In this Futures Trading tutorial on Open Interest Analysis & volume, I have explained about Open Interest Analysis, Volume Analysis and Option chain analysis with respect to Futures trading only. I have covered foundations of Open Interest Analysis & Volume and in the subsequent two parts we will be learning how to trade based on rules discussed in this video.

I have begun by highlighting how to use Open Interest Indicator correctly. Due to expiry every month, Open Interest data is not continuous and hence one has to at all times add open interest across all series. I have then explained open interest rules that will be applicable to futures trading in great depth.

I have then shown how Open interest analysis helps one identify window of opportunity in futures trading. It is in these phases where F&O Traders should focus upon. I have also explained that there are times when Open Interest Indicator is not conclusive and during such times, one must use Volume to Open Interest ratio to assess the direction of Stock Trend in Futures trading. I have also explained rules with respect to Open interest volume ratio for futures trading.

Towards the end of the video, I have explained how Open Interest Indicator can be used to assess Euphoria stage in market along with identifying prolonged consolidation phase beforehand. This is one more advantage of using Open interest indicator along with volume. I have then explained how one should assess price strength using Open Interest and volume.

Its important to note here that Open Interest analysis and volume analysis is very useful when it comes to assessing trend in futures trading. In Part 2 we will be looking at Option chain analysis for futures trading and in part 3, we will be looking at application of Open Interest Analysis, Open Interest and Volume and Option chain analysis. All concepts discussed here are suitable for beginners and working professional.

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