Open interest shows the total number of derivatives contracts held by market participants on the Interdax platform and can be found in the browser panel.
Open interest (sometimes referred to as OI for short) is calculated by summing the USD value of all open contracts, subtracting the USD amount whenever a position is closed.
Whole volume measures the total number of contracts traded, open interest only measures the number of contracts that remain open on the market. Large changes in open interest can be an indicator when certain participants are entering or leaving the market and may give clues to market direction.
As a result, we can think of open interest as the flow of funds into a derivative contract; rising open interest indicates more positions are being opened and remain open, while falling open interest indicates that more and more positions are being closed over time.
We can also combine open interest with price and volume to get insights into the market:
If both price and volume are rising while open interest is rising, this is bullish. However, if both the volume and open interest are rising while the price is falling, this is bearish.
If the price is rising, but both volume and open interest are falling then this means that the uptrend is weakening and points to a bearish outlook. Finally, if price, volume and open interest are all decreasing, then it indicates the downtrend is weakening.