Open interest — The number of futures contracts currently held open in a market, used as a measure of participation and liquidity.
How open interest works in prop trading
Open interest counts positions that exist, not trades that occurred. It rises when a new buyer and a new seller open a position against each other, and falls when both sides close. Volume and open interest together describe different things: volume is activity, open interest is commitment.
For a prop trader the practical use is identifying the active contract month and gauging whether a product is liquid enough to trade at your size. A product with thin open interest will have a wide spread and gappy depth, which turns into slippage — and slippage on a tight drawdown is a rules problem, not just a cost.
Key points
- Counts contracts held open, not contracts traded.
- The month with the highest open interest is the active one during a roll.
- Thin open interest means a wide spread and poor depth at size.
- Rising price with rising open interest is generally read as new money entering, though this is interpretation rather than fact.
Also known as
- OI
- open contracts
Frequently asked questions
What is the difference between volume and open interest?
Volume counts contracts traded during a period and resets each session. Open interest counts positions still open and carries over. A day of heavy volume with flat open interest means positions changed hands rather than new ones being created.
Why does open interest matter to a prop trader?
It tells you which contract month is genuinely active and whether the book is deep enough for your size. Trading a product with thin open interest produces slippage, which consumes drawdown you did not plan to spend.
Open interest is described here as a plain-language educational definition. Firms, platforms, and account programs may apply different conditions or calculations. Verify the current official terms before using this definition to make an account decision.