KNOWLEDGE / DERIVATIVES

Derivatives

Open Interest, funding, long/short, squeeze and market positioning.

06articles

Derivatives4 min read

Open Interest: what he says about market position

Open Interest The increase of the OI means an influx of new positions, and the decrease of their closure or liquidation, but the OI itself does not say which side is right. The rising price together with the OI may indicate the building of the exposure, while the sharp increase in the price at the falling OI often accompanies the closing of the shorts. The interpretation also depends on the foundation and...

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Funding Rate — When the crowd becomes too one-sided

Funding keeps the price perpetual close to the spot market through periodic payments between longs and shorts. A positive pounding means longs pay shorts and negatives the opposite, but its amount must be assessed against the instrument's history. Extreme pounding may indicate unilateral positioning and susceptibility to squeeze. But it does not mean that the reversal will happen immediately; strong...

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Long/Short Ratio — Why Most Are Not Always Right

Long/Short Ratio shows the proportion of accounts or positions on both sides of the market, but methodologies vary between stock exchanges. The mere advantage of long-terms does not mean that more capital is set to increase. Small accounts can dominate in numbers while the higher nominal value is on the other side. Therefore, the ratio is worth reading together with the OI, the pounding and the price change, as well as knowing...

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

OI + Funding + price: how to read these three data together

Price combination, Open Interest and the foundation allows you to better understand whether movement arises through new positions, their closure or change the cost of maintaining the exposure. None of the three elements should be interpreted separately. Price up + OI up + pounding up suggests an influx of longs, but increases the risk of congestion. Price up + OI down more often indicates closing shorts....

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Short squeeze and long squeeze — How violent movements arise

Squeeze appears when one-sided positioning is forced to close, and these orders further drive traffic. Short squeeze strengthens growth, and long squeeze decreases, especially when fluidity is thin. Typical ingredients are high OI, extreme pounding or long/short, important technical level and sudden price expansion. After breaking the alloys and levels of forced liquidation...

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Futures contracts and crypto market base analysis

Derivatives4 min read

Basis futures, contango and backwardation: what they say about leverage demand

The difference between the price of the futures and the spot market is called basis. When futures trade higher than the spot, we have contango; when lower — backwardation. This relationship helps to assess the cost of the forward exposure and the behaviour of participants using leverage. High positive basis may indicate strong demand for long exposure or cost of capital, and negative basis appears more often in...

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.