Volume and Open Interest

Volume and Open Interest is absolutely necessary. These need to be monitored constantly. Ganntrader can display total volume; total open interest or contract volume and contract open interest depending on the type of data loaded. Not all futures contracts contain both total and contract volume and open interest. Stocks will only have total volume. Select Volume and Open Interest under the View menu.

You can change the default scaling for the Volume and Open Interest window by clicking the Left and Right mouse buttons inside the window.

For an up trend to be considered valid the volume must increase and for a downtrend the volume to be considered valid the volume must also increase. Counter trend movements must show a decrease in volume. Open interest should increase in an up trend and the same way as volume increase in a down trend for the trend to be valid. Increasing open interest means that positions are being added.

It is necessary to watch both volume and open interest to know the trend of the market. This gives you a picture of the underlying trend of the market. See the first chart below showing both open interest and volume.

In this chart only volume and prices are displayed to clearly indicate the principals. If you look at A you will see volume increasing with an upward trend in price and volume decreasing with a downturn in price. See however at B with an up trend in price volume no longer increases indicating that the trend is no longer upward. At C you see volume increasing with the downward move and decreasing with the upward move to D which is now very bearish.

Now look at the following chart. From point A to B open interest increases indicating shorts are increasing their position. From point B to C open interest stays the same. Shorts have maintained their position. From C on the price continues to then fall indicating shorts were right.

Oft Sann Soybean CflL. Stale - 0.1)625 Bot = 13.25 Tap - 27.9375

Oft Sann Soybean CflL. Stale - 0.1)625 Bot = 13.25 Tap - 27.9375

■'HyW Hi^y^l'i. ni' ¡¡¡'^ j^l mu

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