What is Open Interest?

Open interest is a number which counts that how many open contracts were made on the day in questions on the market we’re interested in. We’re talking about an open contact when a buyer engages in to future or options contract. This contact remains open until the predetermined requirements have been met like the goods have been delivered in time, selling the current contract or buying an offsetting contract.

A common error what people make is that they associate open interest to trade volume the difference is that trade volume only records how many contracts were opened on the day in question, and open interest is the way how they measure liquidity in the market mentioned.