Open interest: what it is and how to read it
Open interest shows how many futures positions are open right now. It helps you see whether new money is entering the market or old positions are simply closing.
What open interest is
Open interest (OI) is the number of open futures contracts. Each contract is a pair: someone is long, someone is short.
- A new buyer and a new seller open positions: OI rises.
- One passes a position to another: OI doesn't change.
- Both sides close: OI falls.
How it differs from volume
Volume counts all trades over a period. Open interest shows how many positions remain open right now. Volume can be huge while OI stays flat, if participants are just passing positions to each other.
Reading it together with price
The OI value by itself says little. It's read together with price movement.
| Price | OI | Common reading |
|---|---|---|
| Rising | Rising | New positions are entering the move |
| Rising | Falling | Shorts are closing, little new money |
| Falling | Rising | New shorts are being built |
| Falling | Falling | Longs are closing |
These are guidelines, not rules. OI alone can't tell you exactly who's right or who got in first.
Why it matters to a trader
- Vulnerability. When many positions are stacked in the direction of the move, a sharp pullback can trigger a chain of liquidations.
- Quality of the move. A rise with no inflow of positions may just be shorts closing.
- Together with funding. A strong skew to one side usually shows up in funding too.
Common mistakes
- Treating rising OI as a buy signal. It shows an inflow of positions, not their direction.
- Looking at one exchange only. On a coin with several large venues, the picture may be incomplete.
- Forgetting context: the market phase, levels and news.
In MAMAY, the MAMAY Breakout screener uses open interest and walls to find the coins where the action is today. The lesson on the screener explains this in plain words.
FAQ
Is there open interest on spot?
No. It's a measure of the derivatives market: futures and options. On spot the buyer simply receives the coin.
Is rising open interest good?
By itself it's neither good nor bad. It means more positions are open. What matters is what price is doing at the same time.
Where can I see open interest?
On the exchange itself in the futures section, or in specialized services. In MAMAY it's used in the crypto screeners.