How to use Volume and Open Interest in Trading

Futures volume and Open interest are significant factors to monitor when trading Futures and Options.
Let's Understand the two terms in Detail
Open interest is the total number of futures or options position which have not been closed.It is an indicator of the depth or liquidity of a futures market, which influences the ability to buy or sell at or near a given price.
Open interest can be a tricky concept, especially for beginners. In a nutshell, here's how open interest is calculated:
If a new buyer (a long) and new seller (a short) enter a trade, open interest increases by one.
However, if a trader already holding a long position sells to a new trader wanting to initiate a long position, open interest remains the same.
If a trader holding a long position sells to a trader wanting to close his existing short position, open interest decreases by one.
Volume is the number of transactions in a futures or options  made during a specified period of time.
You will want to exercise extra caution when attempting to trade a market with very low volume and open interest--or in other words, an illiquid market. Like we generally have in last week of December as Most of Traders are in holiday mood.
Good and timely fills (order execution)

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