In intraday there can be buying or selling…is there anyway to find if it’s fresh buy or square off buy order …and if it’s fresh sell or square off sell…
For Equity I think there will be no option find like that but there is way to find it with Futures segment.
Suppose you want to analyse for SBIN then open SBIN FUT and add OPEN INTEREST indicator to your chart and check below scenarios.
If the Stock is moving Up then the Indicator is moving Up then you can say it is fresh buying.
If stock moving Up but indicator moving down then it is a Square off kind of situation which u can say as unwinding.
If the price moving down and indicator is rising then it is sign of Strong down trend or fresh short positions are building up.
If the price is moving down and the indicator is falling it is a sign of exit from short position.
what about orderflow ? can we detect something with that ?
Also in futures , open interest is created only when people sells new contract right ? so how we can say when Stock is moving Up then the OI is moving Up then you can say it is fresh buying
if more OI created it means more sellers right ?
Open interest is live contacts and a contract is always between two therefore number of buyers = number of sellers always. Long buildup, short covering, long unwinding etc are the terms which can be understood by trader psyche rather human psyche. Let’s discuss long buildup. It is the situation where prices are going up and open interest also going up. When price go up it is natural that majority would love to encash. However, if open interest also going up, there must be a set of traders/investors who still want to purchase. In this situation this set of traders must be having greater confidence in prices moving even higher. This confidence may be based on insider news or technical analysis or simply brutal force of big money. Although result will not be always as anticipated as the fourth reason can be manipulation of established perception or even a counter party can come in the picture anytime with even more reason. Similarly, other terms can also be explained. The stock market is set of hundreds variable each affecting other with ever changing rate and effect. You may therefore experience almost perfect randomisation in the market.
Yes , but open interest increase only when new sellers sell to buyers right. so my question is if the price increase and oi increase it means fresh sellers are entering right.?
Open interest increase means fresh sellers are entering and fresh buyers are entering
Your looking from only Sellers perspective.
OI increases means contracts are increasing where contracts increases when buyers and sellers both entering to the market same like equity. where decrease in OI means decrease in contracts here Buyer or seller wants to exit the trade so the OI is decreasing.
In simple I can say OI indicator give you information about the strength of the Trend …
If OI increases it means Bullish or Bearish trend is strong … If OI decreases means the current trend what ever it may be Bullish or Bearish is getting week.
Thank you , I was looking into sellers perspective because I was used to looking at option chain OI, and most of the time when more writing occurs (OI increase) , price follows them (70% of the time)
You said OI increase means bullish or bearish trend is strong …does it mean OI increase in call side …means strong bearish trend and OI increase in Put side means strong bullish trend?
Also if OI call is more than OI put means bearish and vice versa?