Open Position Ratio

DEFINITION of 'Open Position Ratio'

The percentage of open positions held for major currency pairs relative to all positions for major currency pairs. The open position ratio is used in forex trading, and includes both long and short positions. Trading platforms typically provide this information and update the ratio periodically over the course of the day.

BREAKING DOWN 'Open Position Ratio'

Open position ratios are provided by trading platforms, and are calculated from the positions of clients who use the platform. This means the ratio is only a sample of what may be occurring in the broader market. Large investment banks do not use retail trading platforms, so forex positions they hold are not included. Investors relying on small movements in major currency pairs to make a profit should take caution when using open position ratios, since large investment houses are more likely to move the market with their trades.

The open position ratio does not show the percentage of long or short positions relative to total positions for a major currency pair, but instead shows how a currency pair compares to all major currency pairs. For example, a currency pair of Euros and U.S. Dollars (EUR/USD) may have an open position ratio of 25.8. This means that of all open currency positions, EUR/USD represents 25.8 percent of all open positions. This shows the market that most investors are focusing on.

RELATED TERMS
  1. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  2. Counter Currency

    The currency used as the reference or second currency in a currency ...
  3. Funding Currency

    The currency being exchanged in a currency carry trade. A funding ...
  4. Quote Currency

    The second currency quoted in a currency pair in forex. In a ...
  5. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ...
  6. Major Pairs

    The four forex pairs which are considered to be the most heavily ...
Related Articles
  1. Forex Education

    Forex Currencies: Conclusion

    By Brian Perry Conclusion The currency markets are the largest and most actively traded financial markets in the world with daily trading volume of more than $3 trillion (Triennial Central ...
  2. Forex Education

    Forex Tutorial: Reading a Forex Quote and Understanding the Jargon

    One of the biggest sources of confusion for those new to the currency market is the standard for quoting currencies. In this section, we'll go over currency quotations and how they work in ...
  3. Forex Education

    Drastic Currency Changes: What's The Cause?

    Currency fluctuations often defy logic. Learn the trends and factors that result in these movements.
  4. Stock Analysis

    The Ultimate Guide To Currency ETF Trading

    Want a simpler way to invest in the forex market? Currency ETFs give you just that!
  5. Forex Education

    Forex Tutorial: How To Trade & Open A Forex Account

    So, you think you are ready to trade? Make sure you read this section to learn how you can go about setting up a forex account so that you can start trading currencies. We'll also mention other ...
  6. Forex Education

    The 6 Most-Traded Currencies And Why They're So Popular

    Every currency has specific features that affect its underlying value and price movements in the forex market.
  7. Forex Education

    How Do You Make Money Trading Money?

    Making money in the foreign exchange market is a speculative process. You are betting that the value of one currency will increase relative to another.
  8. Forex Strategies

    What Makes the EUR/USD A Risky Trade Now?

    What are the current risks of trading the EUR/USD pair? The Fed may raise interest rates this summer and the ECB has begun a quanitative easing program.
  9. Options & Futures

    Forecast The FX Market With The COT Report

    Three empirical findings on futures data can help currency traders determine buy and sell points.
  10. Forex Education

    Forex Currencies: Ways To Trade

    By Brian PerryInvestors need to select not only a trading strategy and a currency pair but also a market in which to trade. There are several markets available to currency traders, including ...
RELATED FAQS
  1. How do you make money trading money?

    Investors can trade almost any currency in the world. Investors, as individuals, countries, and corporations, may trade in ... Read Answer >>
  2. Why is the U.S. dollar shown on the top of some currency pairs and on the bottom ...

    All currencies are traded in pairs. The first currency in the pair is called the base currency while the second is called ... Read Answer >>
  3. Why is currency always quoted in pairs?

    When reading currency quotes, you have probably noticed that there is only a single quote for a pair of currencies. Currency ... Read Answer >>
  4. How do I close a long position in forex?

    Learn the different ways that traders close out existing long positions in the forex market, depending on whether their brokers ... Read Answer >>
  5. Why isn't the EUR/USD currency pair quoted as USD/EUR?

    In a currency pair, the first currency in the pair is called the base currency and the second is called the quote currency. ... Read Answer >>
  6. Can I trade a currency when its main market is closed?

    In the forex market, currencies from all over the world can be traded at all times of the day. The forex market is very liquid, ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center