Open interest is the total contract value in USDT held by the users in Flipster that has yet to be settled. It is used as an indicator to determine market sentiment and the strength behind price trends.
If the maximum open interest limit for a specific symbol has exceeded, system will be on reduce-only mode and will automatically reject any orders that exceed the open interest limit.
Note: Reduce-only here refers to a system mechanism that denies users from placing open orders to increase position size.
Let’s take BTCUSDT.PERP as an example.
The Notional Max Position Size that can be held by a single user is 3,000,000 USDT. If the user places another order that will exceed this limit, the order will be rejected.
The Maximum Open Interest for all users combined is 20,000,000 USDT. If any of the user place another order that exceeds this limit, the order will be rejected.
For symbol-specific maximum open interest amount, please refer to Flipster’s Contracts page.
As an example, assuming that User A, User B, and User C are trading on BTCUSDT.PERP contract:
1. User A opens a position with a notional value of 20,000 USDT.
- Total Open Interest increases to 20,000 USDT.
2. User B opens a position with a notional value of 35,000 USDT.
- Total Open Interest increases to 55,000 USDT (20,000 + 35,000 USDT).
3. User C open a position with a notional value of 50,000 USDT.
- Total Open Interest increases to 105,000 USDT (55,000 + 50,000 USDT).
Open interest would remain at 105,000 USDT until any of the users close his or her position(s), at which the open interest will decrease.
4. User A closes the existing position.
- Total Open Interest decreases to 85,000 USDT (105,000 - 20,000 USDT).
Note: Notional Value is defined as Quantity of Contract * Average Entry Price.