Nifty live open interest
Everyday the open interest streamed by the exchanges at 3. Am I missing something? Does it make sense to track the live OI and use it as part of trading strategy? This is because of how institutional trades are settled.
Open Interest
Traders often use open interest is an indicator to confirm trends and trend reversals for both the futures and options markets. Open interest represents the total number of open contracts on a security. Here, we'll take a look at the importance of the relationship between volume and open interest in confirming trends and their impending changes. Volume, which is often used in conjunction with open interest, represents the total number of shares or contracts that have changed hands in a one-day trading session.
The greater the amount of trading during a market session, the higher the trading volume. A new student to technical analysis can easily see that the volume represents a measure of intensity or pressure behind a price trend. According to some observers, greater volume implies that we can expect the existing trend to continue rather than reverse. Many technicians believe that volume precedes price. They think the end of an uptrend or a downtrend will show up in the volume before the price trend reverses on the bar chart.
Their rules for both volume and open interest are combined because of similarity. However, even supporters of this theory admit that there are exceptions to these rules. There are many conflicting technical signals and indicators, so it is essential to use the right ones for a given application. Price action increasing during an uptrend and open interest on the rise are interpreted as new money coming into the market.
That reflects new buying, which is considered bullish. Now, if the price action is rising and the open interest is on the decline, short sellers covering their positions are causing the rally. Money is, therefore, leaving the marketplace—this is taken as a bearish sign.
If prices are in a downtrend and open interest is on the rise, some chartists believe that new money is coming into the market. They think this pattern shows aggressive new short selling. They believe this scenario will lead to a continuation of a downtrend and a bearish condition. Suppose the total open interest is falling off and prices are declining. This theory holds that the price decline is likely being caused by disgruntled long position holders being forced to liquidate their positions.
Some technicians view this scenario as a strong position because they think the downtrend will end once all the sellers have sold their positions. According to the theory, high open interest at a market top and a dramatic price fall off should be considered bearish.
That means all bulls who bought near the top of the market are now in a loss position. Their panic to sell keeps the price action under pressure.
Other analysts interpret some of these signals quite differently, mostly because they place less value on momentum. In particular, excessive short interest is seen by many as a bullish sign. Short selling is generally unprofitable, particularly after a significant downward movement. However, naive price chasing often leads less informed speculators to short an asset after a decline. When the market rises, they have to cover.
The typical result is a short squeeze followed by a fierce rally. In general, momentum investors are not nearly as good at predicting trend reversals as their contrarian counterparts. While it is true that there is generally more buying and bullish price action all the way up, that does nothing to help investors decide when to sell.
In fact, volume often increases before, during, and after major market tops. Some of the most respected indicators are based on contrarian views. RSI is another useful contrarian technical indicator. There is no need to study a chart for rule-based signals. If you are a new technician trying to understand the basics, look at many different theories and indicators. What works for some assets and investment styles will not work for others.
Look at stocks, bonds, gold, and other commodities and see if a specific indicator works for a particular application. Technical Analysis Basic Education. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways Many technicians believe that volume precedes price. According to this theory, increasing volume and open interest indicate continued movement up or down.
If volume and open interest fall, the theory holds that the momentum behind the movement is slowing and the direction of prices will soon reverse. Contrarian analysts interpret some of these signals quite differently, mostly because they place much less value on momentum.
The basic rules for volume and open interest:. Figure 1: General rules for volume and open interest. Figure 2: Bullish and bearish signs according to open interest. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
Related Articles. Volume: What's the Difference? Partner Links. Related Terms Gravestone Doji A gravestone doji is a bearish reversal candlestick pattern formed when the open, low, and closing prices are all near each other with a long upper shadow. Counterattack Lines Definition and Example Counterattack lines are two-candle reversal patterns that appear on candlestick charts. There are both bullish and bearish versions.
Three White Soldiers Three white soldiers is a bullish candlestick pattern that is used to predict the reversal of a downtrend. Dark Cloud Cover Definition and Example Dark Cloud Cover is a bearish reversal candlestick pattern where a down candle opens higher but closes below the midpoint of the prior up candlestick. Unique Three River Definition and Example The unique three river is a candlestick pattern composed of three specific candles, and it may lead to a bullish reversal or a bearish continuation.
Harami Cross Definition and Example A harami cross is a candlestick pattern that consists of a large candlestick followed by a doji. Sometimes it signals the start of a trend reversal.
Nifty Open Interest Live - BloombergQuint offers the live and latest updates on Top Open Interest Index Options & more! Open Interest values in the option chain are refreshed at the end of the day after bhavcopy file has been made available on the website.
Conjointly the amount of buy market orders before the stock exchange opens. Nifty Open Interest measures the number of outstanding contracts at the tip of every day. Actually, Nifty Open Interest solely records half the outstanding contracts. For every buyer, there should even be a seller, however.
The way of presenting Bank Nifty Option Chain may be different but the data will always remain the same. So choose the presentation you are comfortable with and then begin with your analysis.
Open interest is the total number of futures contracts held by market participants at the end of the trading day. It is used as an indicator to determine market sentiment and the strength behind price trends.
Using Open Interest to Find Bull/Bear Signals
If you are an intraday trader and you trade mainly in nifty options. Then you should be keeping a track of the open interest at the nearby strike price. Also, option writing needs huge capital, which small retail traders cannot afford. We know in options trading the option writers makes money consistently and option buyers lose every time. These option writers do a lot of analysis and research before taking any big positions. So the levels of highest open interest are the areas where these traders are betting upon.
Open interest and volume analysis
Want to try X-volume - write in private. Open interest measures the total level of activity into the futures market. The Open Interest is the total number of options or futures contracts that are not closed on a particular day. Volume precedes price. Open Interest is the total number of outstanding contracts. Levels thanks to X-Lines indicator. Nifty Option Chain: Open interest shows the total number of outstanding contracts that are yet to expire. Open Interest is the total number of contracts which is presently in existence and is not offset by the closing of trades. Technicians utilize a three dimensional approach to market analysis which includes a study of price, volume and open interest. Unlike in stock trading, whereby there is a fixed number of shares to be traded i.
Traders often use open interest is an indicator to confirm trends and trend reversals for both the futures and options markets.
Never miss a great news story! Get instant notifications from Economic Times Allow Not now. Definition: Open interest is the total number of outstanding contracts that are held by market participants at the end of each day. Open interest measures the total level of activity into the futures market.
