open interest as strategy for trading

[fin7]

hii,

I heard that rise in open interest and simultaneous rise in stock price confirms uptrend. Is it true. I could not understand how it is possible, as i know a contract has both buyer and a seller. So at all times there are equal number of participants who think in two different directions

 

[srigopal_hyd]

Not really...

can check recent graph of canara bank and punjab national bank.

 

[sumeetsj]

Hope this helps

 

[jagankris]

Hope this helps

Interpreting OI is a complex thing and has many false moves like any other strategy.

Just check the above chart with real time markets and you will be surprised if the above holds good and then draw your own conclusion.