Page 31 - Futures Money Machine-Study Session #5
P. 31
Beyond The Basics
Open Interest & Futures…
If prices are rising and the volume and open interest are both up, the market is
decidedly strong. If the prices are rising and the volume and open interest are both
down, the market is weakening. If, however, prices are declining and the volume and
open interest are up, the market is weak; when prices are declining and the volume and
open interest are down, the market is gaining strength.
The Bottom Line
Open interest can help futures traders get a sense of whether the market is gaining
strength or getting weaker. When analyzing futures, avoid the common mistake of
failing to take this number into account. As an investor, the more you know, the less
likely you are to be caught off guard in a losing trade. Remember, it's your money, so
invest it wisely.
