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. Open Position

    In investing, any trade that has been established, or entered, ...
  2. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  3. Base Currency

    The first currency quoted in a currency pair on forex. It is ...
  4. Currency Pairs

    Two currencies with exchange rates that are traded in the retail ...
  5. Counter Currency

    The currency used as the reference or second currency in a currency ...
  6. Currency Pair: EUR/USD (Euro/U.S. ...

    The abbreviation for the euro and U.S. dollar (EUR/USD) pair ...
Related Articles
  1. Forex

    Currencies

    The major currencies in the forex market.
  2. 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 ...
  3. Options & Futures

    The Secret To Finding Profit In Pairs Trading

    Read about a market-neutral trading strategy using relatively low-risk positions.
  4. Forex Education

    EUR/USD

    Trading the euro with the U.S. dollar has many advantages due to its correlation with other currencies.
  5. Investing Basics

    Analyze Investments Quickly With Ratios

    Make informed decisions about your investments with these easy equations.
  6. 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 ...
  7. Forex

    The Pairs

    There are major currency pairs in the forex market which you should know about.
  8. 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 ...
  9. Forex Education

    The Forex Market: Who Trades Currency And Why

    The forex market has a lot of unique attributes that may come as a surprise for new traders.
  10. Forex Education

    Forex Currencies: The Four Major Pairs

    By Brian PerryIn forex trading, four major currency pairs are the most popular: EUR/USD: The euro and the U.S. dollar USD/JPY: The U.S. dollar and the Japanese yen GBP/USD: The British ...
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. How can I trade in cross currency pairs if my forex account is denominated in U.S. ...

    The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is ... Read Answer >>
  3. How is the value of a pip determined?

    Learn how the pip is used in the pricing of a currency pair in forex trading, and see how the foreign exchange market is ... Read Answer >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center