Knowing the level of activity in a given market when the price rises or falls can be a powerful indicator to future action. Open interest figures offer just such information. The key to success is devising a specific set of guidelines for reading the figures. Open interest analysis is one of the most powerful and easily accessible trading tools. Applying it takes a bit of work and some thinking on the trader's part, but trading rewards come only to those willing to pay the price. Open interest is a wonderful tool the exchanges provide to futures traders that equity traders do not have. Still, many are not aware of what it is or how to use it successfully. Here, we will provide a primer on open interest, an "advanced course" and six guidelines for applying this approach in the markets.
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