Open interest
= Number of active futures contracts.
Let's take Bitcoin:
Currently, there are open futures worth ~$10 billion.
Wich of them are long and wich are short?
Well, there's always a long for every short.
1 contract = 2 positions. One side that is short and one side that is long.
Changes in OI
Now imagine the following scenario:
You want to enter a long position.
As you know, for every long, there is a short.
But here comes the thing:
Are you buying your contracts from someone who is closing a long or someone who is opening a short?
When you buy a position from someone else, the OI doesn't change.
But when two new positions are opened, one long and one short, the open interest increases.
Uptrend
OI up: bullish
→ new longs
OI down: bearish
→ price rises because of shorts closing
→ money leaving market
Downtrend
OI up: bearish
→ new shorts
OI down: bullish
→ losing longs closing positions
→ downtrend ends when longs have completed selling
Please engage with this post to show the algorithm, that more people should read this 🫶
$BTC potential day-trade idea:
- Asia holds
- London pumps
- ...NY reverses?
Be careful shorting tops, wait for London or NY to show some momentum weakness. For example, wicks to the uspide but price not progressing any further.
Big love for you if you read all my Sunday updates!
Very happy to see how the first part of the plan has just played out in front of our eyes.
I started posting the Sunday updates since March 22' and I haven't missed any. It's the least I can do for you. What a community! 🤩🫶
🎉 CEX·IO has recently listed MKR, so you can now trade MKR/USD safely and easily!
Maker is one of the most popular #DeFi tokens. Its market cap exceeds $1.5B!
To spread this news, we give away $1000 worth of $MKR
🎁 Enter our Giveaway now 👉 https://t.co/0wST3V5VT2
Terms👇
To all the #coders out there.
Hope your week is filed with many amazing achievements. Please support the starving developer, and keep a look out as I'll try come across useful tips that everyone already knows.
#developers#100DaysOfCode#computer#follow#code#CodeNewbie