Lets learn Fundamental Analysis Class 1.

What's Open Interest 🤔 ? Complete easy guide below 👇

Don't forget to follow me for further update !

let's tart 😄

What's Open Interest in crypto market and how its impact the market ?

This is a great example that helps understand the concept of Open Interest. The example shows three traders trading in a newly established market. Initially, the market has an Open Interest of 0 and a price of $100. Trader A takes a long position, while Trader B takes a short position. As a result, the Open Interest becomes 1 because a long and a short position have been opened simultaneously.

The market price rises to $150, and Trader C also takes a long position. Trader A exits their position and matches Trader C's position. The question is, has the Open Interest changed? No, the Open Interest remains 1 because a long position has exited, and a new long position has been opened.

The market price continues to rise and reaches $200. Trader B exits their position and matches Trader C's position. As a result, both traders' positions are closed, and the Open Interest returns to 0.

This example illustrates that there are three possible outcomes for Open Interest:

1. If both buyers and sellers increase, Open Interest will increase.

2. If both buyers and sellers close their positions, Open Interest will decrease.

3. If one side opens new positions while the other side closes their positions, Open Interest will remain the same.

This example also shows how the underlying asset price changes when every buyer has a corresponding seller and vice versa. This is a complex topic, but this example helps understand the concept.

#USJoblessClaimsDrop #BinanceAlphaAlert #fundamentalanalysis #Openinterest #LearnTogether