Open Interest

Track the total number of outstanding derivative contracts to understand whether money is flowing into or out of the market and whether trends have real conviction behind them.

What is Open Interest?

Open Interest (OI) shows the total number of open derivative contracts (futures and perpetual swaps) that have not been settled or closed. Every open position — whether long or short — contributes to the open interest count. When a new buyer and a new seller enter a trade, OI increases. When an existing long and an existing short close their positions against each other, OI decreases.

Unlike volume, which counts every transaction, open interest only changes when new positions are created or existing positions are fully closed. This makes it a direct measure of how much capital is committed to the market at any given time. Rising open interest means new money is entering, which tends to fuel continuation of the current trend. Falling open interest means positions are being unwound, which often signals that a trend is losing steam.

Open Interest is displayed as a sub-chart indicator below the main price chart, typically rendered as a line or area chart that tracks the total OI value over time.

Key Concepts

• Rising OI + Rising Price: New long positions are being opened — buyers are entering with conviction, supporting bullish continuation
• Rising OI + Falling Price: New short positions are being opened — sellers are entering aggressively, supporting bearish continuation
• Falling OI + Rising Price: Short positions are being closed (short covering) — the rally may lack conviction since it is driven by exits rather than new entries
• Falling OI + Falling Price: Long positions are being closed (long liquidation/exits) — the decline may be nearing exhaustion as committed longs exit
• OI Spikes: Sudden large increases in open interest often precede volatile moves — significant new positioning is being established, and when those positions are forced to unwind, the resulting move can be sharp

How to Use Open Interest

1. Open Chart from the sidebar and navigate to the indicator settings
2. Enable the Open Interest indicator — it will appear as a sub-chart below the main price chart
3. Compare the direction of OI with the direction of price to assess trend strength and conviction
4. Watch for sudden OI spikes that indicate large new positioning
5. Monitor OI declines during price moves to identify short squeezes or long liquidation cascades

What to Look For

• Bullish signals: Steadily rising OI alongside rising price confirms that new longs are entering and the uptrend has genuine participation. A sharp drop in OI during a downmove followed by price recovery suggests shorts were squeezed and the bearish positioning has been flushed out. OI building at a support level indicates that traders are establishing new positions with conviction at that price.
• Bearish signals: Rising OI alongside falling price confirms aggressive new short positioning — the downtrend has conviction. If OI is rising while price is stalling at resistance, it indicates that shorts are being established at that level, adding selling pressure. Very high OI at the end of a long rally creates conditions for a cascading long liquidation event.
• Key patterns: A divergence between OI and price — where price makes new highs but OI is declining — warns that the trend is being driven by closing positions rather than new conviction. OI spikes at extremes often mark turning points, as the accumulated leverage creates conditions for forced liquidations. Rapid OI decline during sharp price moves indicates a liquidation cascade where forced exits are amplifying the move.
• Combine with: Funding Rate to understand the balance between long and short positioning, Liquidation Levels to see where the OI is most vulnerable to forced liquidation, MACD or RSI for technical momentum confirmation alongside the flow data

Supported Exchanges

Tips

• Always interpret OI in context with price direction — rising OI alone is not bullish or bearish; the combination with price movement determines the meaning
• OI spikes before major economic events or announcements often indicate that traders are placing speculative bets — the subsequent volatility can be extreme in both directions
• For Hyperliquid markets, use the OI Delta indicator instead, which provides real-time open interest changes sourced from on-chain data
• Very high open interest relative to recent history creates fragile market conditions — it means a large amount of leveraged capital will be forced to exit if price moves against it, amplifying volatility