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Seasonal Open Interest° by toodegrees
Updated
Description:
The Open Interest (OI) is a valuable metric that gets released at the end of each trading day. This metric represents the number of outstanding futures contracts held by market participants for a given commodity or market
The concept of utilizing the OI data as a strategic trading tool was first introduced by Larry Williams:
The Inner Circle Trader (ICT) expanded on these ideas, by exposing Smart Money's behaviour:
Further, ICT showed the importance of OI in consolidations at Institutional Support or Resistance levels:
Last but not least, the Seasonal Open Interest shows us a historical reference point of how OI usually, but not always, develops over the trading year.
Depending on the narrative, a higher/lower OI than its Seasonal Tendency can provide an incredible edge by pointing traders towards what side Smart Money is taking.
The Open Interest Meter shows you a visual representation of how many Standard Deviations the Open Interest is deviating from its Seasonal Tendency.
You can also display this visually as a shaded area between the two metrics:
Features:
The Open Interest (OI) is a valuable metric that gets released at the end of each trading day. This metric represents the number of outstanding futures contracts held by market participants for a given commodity or market
The concept of utilizing the OI data as a strategic trading tool was first introduced by Larry Williams:
- Rise in Price + Rise in OI: strong trend – new money is coming into the market, showing aggressive buying activity
- Rise in Price + Decline in OI: weakening trend – less money coming into the market, suggesting that the move is likely to reverse lower
- Decline in Price + Decline in OI: strong trend – new money is coming into the market, showing aggressive selling activity
- Decline in Price + Rise in OI: weakening trend – less money coming into the market, suggesting that the move is likely to reverse higher
The Inner Circle Trader (ICT) expanded on these ideas, by exposing Smart Money's behaviour:
- Rise in Price + Rise in OI: shorts are being stopped out, and new sellers take their place – gradually, longs get stronger and shorts get weaker
- Rise in Price + Decline in OI: Smart Money longs are taking profit and liquidating their positions, and weak shorts are exiting the market
- Decline in Price + Decline in OI: longs are being stopped out, and new buyers take their place – gradually, shorts get stronger and longs get weaker
- Decline in Price + Rise in OI: Smart Money shorts are taking profit and liquidating their positions, and weak longs are exiting the market
Further, ICT showed the importance of OI in consolidations at Institutional Support or Resistance levels:
- Consolidation + Rise in OI: bearish sign due to Smart Money is playing the short side and accumulating positions
- Consolidation + Decline in OI: bullish sign due to Smart Money covering their short positions
Last but not least, the Seasonal Open Interest shows us a historical reference point of how OI usually, but not always, develops over the trading year.
Depending on the narrative, a higher/lower OI than its Seasonal Tendency can provide an incredible edge by pointing traders towards what side Smart Money is taking.
The Open Interest Meter shows you a visual representation of how many Standard Deviations the Open Interest is deviating from its Seasonal Tendency.
You can also display this visually as a shaded area between the two metrics:
Features:
- Plot Open Interest Data
- Plot the Seasonal Open Interest for a specific year
- See the OI vs. Seasonal OI in a tailored meter
- Shade the area between the OI and the Seasonal OI based on their difference
Release Notes
Bug Fix: z-score was being calculated on the wrong dataset, fixed.Minor Update: added "Plot for Current Year?" to bypass the year choice, this will only work in Real Time and not in Bar Replay
Release Notes
Update: added OI Source Data feed.
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