Open Position Ratio

  

Categories: Trading, Metrics

It's like a popularity contest for forex trading. Want to know which currency is likely to win homecoming queen? Check out the open position ratio and you'll see which one has the most trading interest.

Take a particular currency pair. EUR/USD, or USD/JPY, or GBP/USD...whatever. (All currencies trade in pairs...EUR/USD signals euro vs. U.S. dollar, etc.). Once you've gotten the pair you want to look at, check out the open positions for that pair. Now find the ratio between that pair's open positions and all the open positions for the major currency pairs.

Basically, you're looking at what proportion of open positions relate to that particular pair. That number represents the open position ratio.

A high ratio (meaning that pair is taking up a larger proportion of the current open positions) indicates a lot of interest in that currency pair. Meanwhile, a low ratio points to a lack of interest...the kind of currency pair who might stay home on prom night and post inspirational quotes on their Instagram feed about the spiritual power of being alone.

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