TRADING ANALYSIS INDICATOR: OPEN INTEREST
Trading analysis indicator: Open interest
Indicador de análisis técnico: Interés abierto
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Sentimiento Long/Short
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Fuerza real del volumen
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Estructura de mercado
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Liquidez real
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Cambios de tendencia
Open interest is one of the best indicators to use with leverage and dayly trading. It is the best tool for judging:
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Long/Short Feeling
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Real volume strength
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Market structure
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Actual liquidity
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Trend changes
Futures open interest
Open interest is the total number of outstanding futures contracts that are held by market participants at the end of the day. Open interest is the number of outstanding contracts held by the longs and the shorts, not the total of both. Remember, because we're dealing with futures contracts, for every long there must also be a short. Therefore, we only need to know the totals on one side.
El volumen habla del número de contratos negociados durante un día. Compra + Venta = 1 volumen de contrato.
El interés abierto se explica a continuación.
OI habla de Contratos abiertos, es decir, de posiciones abiertas.
Cada contrato tiene 2 lados. Un lado de compra (LONG) y un lado de venta (SHORT).
Por lo tanto, en una operación, un comprador va largo y el vendedor va corto. Esto forma un contrato y no dos.
People often confuse volume and OI. While they are related, they aren't the same.
Volume talks about the number of contracts traded during a day. Buy + Sell = 1 Contract Volume.
Open Interest is explained below.
OI talks about Open contracts i.e. Open positions.
Each contract has 2 sides. A buying (LONG) and a selling (SHORT) side.
Hence in one trade, a buyer goes long and the seller goes short. This forms one contract and not two.
Calculo de OI // OI Calculation
3 comerciantes A B C están en el mercado.
A y B piensan que el precio subirá y entrarán en un largo de 5 contratos cada uno. C piensa que el precio bajará y entrará en un corto de 10 contratos.
It's not difficult and you can understand it very easily, with some patience.
3 Traders A B C are in the market.
A and B think the price will go up and enter a long of 5 contracts each. C thinks the price will go down and enter a short of 10 contracts.
El total de contratos abiertos en el mercado es de 10 y por lo tanto el interés abierto es de 10.
En el día 2
A decide añadir 2 LONGS. B decide cerrar 2 LONGS. C no hace nada.
El total de contratos abiertos sigue siendo el mismo.
Conclusión - OI no cambia cuando se transfieren los contactos.
Sólo cambia cuando se crean nuevos contratos entre los participantes o son nuevos jugadores.
In the above case, A and B have entered 10 longs together and C has entered 10 shorts.
The total contracts open in the market are 10 and hence the Open Interest is 10.
On Day 2
A decides to add 2 longs. B decides to close 2 longs. C does nothing.
The total open contracts remain the same.
Conclusion - OI doesn't change when contacts are transferred.
It changes only when newer contracts are created amongst the participants or be new players.
D, un nuevo comerciante entra en el mercado con 10 entradas cortas. A aumenta su entrada larga en 10.
Total de contratos abiertos = 20
Conclusión- Se crea un nuevo interés abierto cuando se crean nuevos contratos, ya sea a través de nuevos comerciantes o de nuevos participantes en el mercado.
Day 3
D, a new trader enters the market with 10 short Entries. A increases his long entry by 10.
Total open contracts = 20
Conclusion- New open interest is created when new contracts are created, either through new traders or through new market participants.
Key takeaways from the calculation // Claves del cálculo.
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OI significa contratos/posiciones abiertas.
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Tiene que haber un long para cada short, por lo que el comercio de derivados a menudo se llama un juego de suma cero.
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OI aumentará sólo cuando se creen nuevos contratos en el mercado.
Al igual que el volumen (que se explica en el cuadro siguiente), la OI no tiene ningún uso por sí sola. Son sólo datos.
Sin embargo, cuando se estudia junto con el precio, se convierte en una de las herramientas más importantes para el comercio de apalancamiento, nunca.
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OI means open contracts/positions.
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There has to be a long for every short, hence derivatives trading is often called a zero-sum game.
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OI will increase only when new contracts are created in the market.
Like volume (explained in the chart below), OI has no use on its own. It's just data.
However, when studied along with price, it becomes one of the most important tools for leverage trading, ever.
DIFERENTES ESCENARIOS // DIFFERENT SCENARIOS
El interés abierto, como el precio, es un dato continuo. Los nuevos contratos abiertos se añaden al OI existente y eso se convierte en el nuevo valor del OI.
El volumen, por otro lado, se calcula por día y no es continuo.
Entendamos ahora los 4 escenarios diferentes en el interés abierto y cómo utilizarlos.
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Construcción a largo plazo
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Cubierta larga (Desenrollado)
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Construcci ón corta...
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Cubierta corta (Desenrollado)
Open Interest, like price, is continuous data. The new contracts opened are added to the existing OI and that becomes the new OI value.
Volume, on the other hand, is calculated per day and is not continuous.
Let us now understand the 4 different scenarios in open interest and how to use them.
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Long Build-Up
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Long Covering(Unwinding)
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Short Build-Up
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Short Covering(Unwinding)
LONG BUILD-UP
Un escenario en el que el precio del activo y la OI aumentan simultáneamente se llama una acumulación larga.
Aquí los participantes del mercado están entrando en nuevos contratos y el sentimiento de largo es más fuerte, empujando los precios más altos.
Price goes up and OI goes up
A scenario where the price of the asset and the OI increases simultaneously is called a long Build up.
Here the market participants are entering into new contracts and the long sentiment is stronger, pushing the prices higher.
LONG UNWINDING
Long Covering/Unwinding. Price Down and OI Decrease In this scenario the OI and the price both decrease. This happens because Long previously entered are taking profits i.e. Contracts are being closed, reducing the OI. This is also a declaration of larger traders covering (closing) their longs since they feel the target has been reached or the trend has reversed. This mostly occurs after the price has seen a substantial rise (See the chart above) and is looking for a retracement or a Reversal.
SHORT BUILD UP
Short Build-Up Price down and OI Up In this scenario the price goes down with the OI increasing. The sentiment to open up a short trade is stronger. New contracts are being formed and hence the OI is increasing.
SHORT COVERING
Short Covering (Unwinding) Price up y OI Down Here the price increases with the OI decreasing. This means that the people who had entered into a short position are closing their entries. This generally occurs after the price has made a substantial correction. The Open interest data when studied with Price movement, becomes a very strong indicator to be used with Price Action Trading.
TWO DIFFERENT ENTRIES // DOS ENTRADAS DIFERENTES
Short Build-up Explained in 1 chart.
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Acumulación corta.
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Se rompe el soporte
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Retest del soporte que se convierte en resistencia
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Entrada corta con confirmación de OI.
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Adición de posición.
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Salida con la vela de absorción de suministros.
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Short Build up.
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Support break.
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Retest of support invalidation.
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Short entry with OI confirmation.
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Position addition.
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Exit with Supply absorbing candle.
Long build-up entry
- Larga acumulación
- La ruptura de la resistencia
- Expansión del volumen
- Confirmación de OI
Estudia esto en detalle, cómo la OI confirma un largo uso de la OI.
- Long Build-up
- Resistance break
- Volume Expansion
- OI Confirmation
Study this in detail, how OI confirms a long using OI.
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