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Price, Volume and Open Interest – The 3 components of good market analysis

 

Futures traders have the benefit of having access to volume and Open Interest data.  This isn’t possible in other markets such as Forex trading. In order to form a sophisticated trade analysis and make reasonable assumptions about what is happening on your charts, being able to combine the information provided by volume, Open Interest and price can give traders an extra edge.

 

Volume

Volume shows the amount of trading activity in a given market on any given day. Rising volume means that there was more trading activity and more contracts were traded than on the previous day.

During trends, high and rising volume means that trading activity supports the ongoing trend and a trend continuation is likely because more investors (or more contracts traded) support current price movements. Technical analysis also uses volume information to identify potential reversals – if during an uptrend

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