A 'Stethoscope' will not Make a Normal Person a Doctor.
Similarly, an 'OI Tool' will not Convert a Normal Person into a Successful Trader.
One Should Know the Right Way of Using It.
Debunking the "Myths" related to Open Interest!
Thread π§΅π§΅
#openinterest #OI
(1/N)
Similarly, an 'OI Tool' will not Convert a Normal Person into a Successful Trader.
One Should Know the Right Way of Using It.
Debunking the "Myths" related to Open Interest!
Thread π§΅π§΅
#openinterest #OI
(1/N)
#1 OI is Not An Indicator
Price Action consists of 'Price' & 'Volume'.
'Volume' is a measure of Market Activity, but not Liquidity.
'OI' measures both Market Activity and Liquidity!
So OI is better than Volume.
Hence, OI is a part of the Price Action.
(2/N)
Price Action consists of 'Price' & 'Volume'.
'Volume' is a measure of Market Activity, but not Liquidity.
'OI' measures both Market Activity and Liquidity!
So OI is better than Volume.
Hence, OI is a part of the Price Action.
(2/N)
#2 OI is Not a Holy grail Concept
Open Interest helps to identify the direction thought by the big players.
But one has to prepare his own rules for trading.
Hence, don't assume you will become a successful trader just by using OI!
(3/N)
Open Interest helps to identify the direction thought by the big players.
But one has to prepare his own rules for trading.
Hence, don't assume you will become a successful trader just by using OI!
(3/N)
#3 OI Don't Provide 'Entry' or 'Exit'
OI indicates the position of big players.
But one has to identify their 'Entry' and 'Exit' points based on Price Action or Indicators.
Only 'Entry' and 'Exit' decide your trade's fate!
(4/N)
OI indicates the position of big players.
But one has to identify their 'Entry' and 'Exit' points based on Price Action or Indicators.
Only 'Entry' and 'Exit' decide your trade's fate!
(4/N)
#4 Not a Good Idea to Use OI on Friday Morning
After the weekly expiry, Friday morning, big shots will be busy accumulating their long/short position.
So don't assume any direction by looking at OI data on Friday morning.
(5/N)
After the weekly expiry, Friday morning, big shots will be busy accumulating their long/short position.
So don't assume any direction by looking at OI data on Friday morning.
(5/N)
#5 Don't Rely on OI Data Between 9.15 AM to 9.45 AM
The exchange sends data every 3 minutes.
So, there will be a little delay in OI data at open, and also some big players will be accumulating the positions.
So rely on OI data only after 9.40-9.45 AM.
(6/N)
The exchange sends data every 3 minutes.
So, there will be a little delay in OI data at open, and also some big players will be accumulating the positions.
So rely on OI data only after 9.40-9.45 AM.
(6/N)
#6 OI Integration
Integrate OI with a trading system (either Price Action or Indicator Based) to get better results.
Use OI to get the direction and technical concept for Entry, Exit, and Position Sizing.
(7/N)
Integrate OI with a trading system (either Price Action or Indicator Based) to get better results.
Use OI to get the direction and technical concept for Entry, Exit, and Position Sizing.
(7/N)
#7 OI Helps to Know the Direction
I had a bearish view of Banknifty from the open. I took a few short trades (shared live on my Telegram Channel).
The reason? OI Data!
Observe the image carefully!
(8/N)
I had a bearish view of Banknifty from the open. I took a few short trades (shared live on my Telegram Channel).
The reason? OI Data!
Observe the image carefully!
(8/N)
#8 OI Helps to Hold the Trade
OI clearly said bears were controlling the market yesterday.
So, based on my system, I took a short trade at 10.50 AM.
Then I started to observe the reversal in both the Price Action and OI charts.
(9/N)
OI clearly said bears were controlling the market yesterday.
So, based on my system, I took a short trade at 10.50 AM.
Then I started to observe the reversal in both the Price Action and OI charts.
(9/N)
My Target was 38505.
- Call OI kept on increasing.
- Put OI kept on decreasing.
- Call OI interpretation was bearish.
- Put OI Interpretation was bearish.
So, it gave me the confidence to hold the trade until it reached my target.
(10/N)
- Call OI kept on increasing.
- Put OI kept on decreasing.
- Call OI interpretation was bearish.
- Put OI Interpretation was bearish.
So, it gave me the confidence to hold the trade until it reached my target.
(10/N)
#9 Delay of 3 Minutes
Many people claim a 3-mins delay in OI data is a big disadvantage for traders
In my opinion, this "3-min delay" is for everyone (correct me if I am wrong here), so it is the same game for everyone!
I also check price for exit, so there is no issue
(11/N)
Many people claim a 3-mins delay in OI data is a big disadvantage for traders
In my opinion, this "3-min delay" is for everyone (correct me if I am wrong here), so it is the same game for everyone!
I also check price for exit, so there is no issue
(11/N)
#10 Decide your Timeframe
Before using OI, one should have clarity on what timeframe they are trading.
Don't jump into scalping just because someone is making money in scalping using OI.
For me, 15-mins with important levels from the daily chart works better.
(12/N)
Before using OI, one should have clarity on what timeframe they are trading.
Don't jump into scalping just because someone is making money in scalping using OI.
For me, 15-mins with important levels from the daily chart works better.
(12/N)
#11 - Options Buying vs. Options Selling
- Time decay works against options buyers and works in favor of option sellers
- Pick ITM if you are an options buyer
- Most Options traders ignore the impact of "Delta", explore it!
(13/N)
- Time decay works against options buyers and works in favor of option sellers
- Pick ITM if you are an options buyer
- Most Options traders ignore the impact of "Delta", explore it!
(13/N)
#12 Price Action + OI = Deadly Combo
From my experience, when we combine 'OI' with 'Price Action' it becomes a deadly combo! Explore it
(14/N)
From my experience, when we combine 'OI' with 'Price Action' it becomes a deadly combo! Explore it
(14/N)
#13 Take Responsibility
Never ever blame someone or something for your losses.
You will always find someone/something to blame.
Instead, take responsibility for your actions, and then only you grow as a trader!
(15/N)
Never ever blame someone or something for your losses.
You will always find someone/something to blame.
Instead, take responsibility for your actions, and then only you grow as a trader!
(15/N)
By any chance, if you read this thread on OI and if you don't know anything about OI, then please read this article to learn more about OI.
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Have a nice weekend!
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