I’ve been checking open interest and volume to decide on trades, but results vary.
Sometimes higher volume helps, while other times open interest is more dependable. They send different signals, and I’m confused about which one to prioritize.
Does anyone else experience this? Which one do you find to be more reliable for decisions?
Both have their place but I lean toward volume for most decisions. Open interest shows commitment from bigger players, which matters for swing trades, but volume gives you immediate confirmation of whether a move is real or just noise.
The trick is using them together. High volume with rising open interest usually means strong continuation. High volume with falling open interest often signals a reversal coming.
For day trading, volume wins every time. For position trades lasting days or weeks, open interest becomes more valuable since it shows institutional backing.
For quick trades like mine, volume is the key. It shows real activity.
Mixing them works better than picking just one. When volume spikes but open interest stays flat, that usually means short term noise rather than a real trend.
Last week a good move on EUR/USD was caught because both were climbing together. That combination gave confidence the breakout was legit.
Volume alone can fool with fake moves, and open interest without volume might show stale positions. Check both but weight volume heavier for entries.
Context matters for priority:
• Day trades: Volume confirms real movement
• Swing trades: Open interest shows institutional backing
• Breakouts: Both rising together = valid signal
• Reversals: High volume + declining open interest
Volume gives immediate confirmation. Open interest shows longer term commitment.
Volume saved me from a disaster last month when I almost entered a breakout trade on GBP/JPY.
The price looked perfect but volume was weak. I skipped it and watched the fake breakout collapse an hour later.
Open interest matters for longer positions, but for quick trades like mine, volume tells the real story about whether moves have conviction behind them.