Hello,
I'm currently writing a sort of book which contains a lot of trading and financials and I need to understand one question:
When I trade some perpetual swaps in an exchange there is also some opponent position which has to fill my order. When I put a limit buy order, then a similar sell market order has to sell into my limit order to open my position and vice versa. That means I cannot open a long position on that exchange without another party opening a short position with the same contract size (or another already existing party selling his long position to me when a buy with market order). So every step increases open interest, don't change open interest (when another holder is swapping his position to me) or declines open interest for both side of the market right? Open interest can increase when new money hits the exchange and another trader is puting new limit orders which are filled the same way. Now the thing I don't understand: How can, long open interest (without short open interest rising) or the short long dollar ratio quickly increase like nothing? Like I see it all the time in analysis charts... Are they just counting market fills? Or is it because of the leverage and price difference? Or are most perpetual / future exchange using additional OTC-Trades? (trades can be opened directly with exchange without market liquidity or another party for certain persons) Would appreciate if some expert can answer this question correctly.....
I'm currently writing a sort of book which contains a lot of trading and financials and I need to understand one question:
When I trade some perpetual swaps in an exchange there is also some opponent position which has to fill my order. When I put a limit buy order, then a similar sell market order has to sell into my limit order to open my position and vice versa. That means I cannot open a long position on that exchange without another party opening a short position with the same contract size (or another already existing party selling his long position to me when a buy with market order). So every step increases open interest, don't change open interest (when another holder is swapping his position to me) or declines open interest for both side of the market right? Open interest can increase when new money hits the exchange and another trader is puting new limit orders which are filled the same way. Now the thing I don't understand: How can, long open interest (without short open interest rising) or the short long dollar ratio quickly increase like nothing? Like I see it all the time in analysis charts... Are they just counting market fills? Or is it because of the leverage and price difference? Or are most perpetual / future exchange using additional OTC-Trades? (trades can be opened directly with exchange without market liquidity or another party for certain persons) Would appreciate if some expert can answer this question correctly.....
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