OI & Volume matrix to trade in Market
OI & Volume trade matrix to trade in Market lets understand below Open Interest (OI) and Volume are critical indicators that traders use to market sentiment, liquidity, and potential price movements. Here's a detailed explanation of the importance of both: 1. Open Interest (OI) Open Interest refers to the total number of outstanding contracts (options or futures) that are currently active in the market. It increases when new contracts are created and decreases when contracts are closed or settled. Importance of OI: Trend Confirmation : Increasing OI along with an increasing price indicates that new money is flowing into the market, confirming a bullish trend. Increasing OI along with a decreasing price signals a bearish trend, as traders are actively opening short positions. Reversal Indication : Decreasing OI, even with significant price movement, suggests profit-taking and a potential reversal or slowdown in the c...