Just saw: $XTZ 15-minute contract open interest rose 38.03%, with the value of open positions at around $3.53 million; the price rose 5.59% over the same period.
People often ask how to interpret open interest, so here’s my take.
Open interest reflects the overall size of positions in a contract: the higher it is, the more positions could potentially be liquidated when the price moves sharply.
If the price is mostly flat while open interest rises sharply, it means both sides are adding to their positions. A larger price swing is usually more likely to follow, though the direction is uncertain.
Sizing positions based on your stop-loss distance is much more reliable than just guessing.
Make your own decisions about when to enter and exit—don’t follow the crowd.
People often ask how to interpret open interest, so here’s my take.
Open interest reflects the overall size of positions in a contract: the higher it is, the more positions could potentially be liquidated when the price moves sharply.
If the price is mostly flat while open interest rises sharply, it means both sides are adding to their positions. A larger price swing is usually more likely to follow, though the direction is uncertain.
Sizing positions based on your stop-loss distance is much more reliable than just guessing.
Make your own decisions about when to enter and exit—don’t follow the crowd.