Volume and Open Interest with FOREX Trading

Volume and open interest statistics are not available on the spot market, as there is no centralized clearinghouse or exchange to collect the data. It is available for currency futures. Volume is the total number of transactions over a fixed period of time, usually one trading session. Open interest is the total number of outstanding futures contracts. If a new long buys from a new short, open interest increases by one. If a new long or new short buys or sells to an old short or old long, open interest does not change. If an old long offsets to an old short, open interest decreases by one. Many technical traders in the futures market consider volume and open interest to be useful forecasting information.

Open interest is further dissected for analysis in some futures markets between commercial interests (hedgers), large speculators, and small speculators as seen on the website www.timingcharts.com. A government report issues this information as the Commitment of Traders (COT). Mercury charts, developed by the author some years ago, graphically depict the rules for interpreting price, volume, and open interest. An example of a commodity futures technique hiddenâ

By Michael Duane Archer
Michael Duane Archer has been an active futures and FOREX trader for more than 35 years. He has worked in various advisory capacities, notably as a commodity trading advisor, registered SEC investment advisor, and branch manager for Heinold of Hawaii. He currently trades FOREX and futures and is involved in several technical analysis research projects.

Copyrighted 2020. Content published with author's permission.

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