|What is liquidity and what is its significance?||
Liquidity refers to the availability of a product and ensures market participants have the ability to buy and sell easily.
A liquid market increases the likelihood for finding a counterparty when entering or exiting a trade.
|What is volume a measurement of in trading?||
Volume in trading refers to the total number of contracts exchanged between buyers and sellers of a market during trading hours over a given period.
Higher trading volumes are considered more positive than lower trading volumes because they indicate the availability of orders in the market allowing better order execution during the trading session.
|What is open interest in the derivatives market?||
Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled for an asset.
Open interest equals the total number of bought or sold contracts, not the total of both added together. Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market.