Open Position Ratio

AAA

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.

INVESTOPEDIA EXPLAINS '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. Retail Foreign Exchange Dealer ...

    An individual or organization that acts as a counterparty to ...
  2. Open Position

    In investing, any trade that has been established, or entered, ...
  3. Hedge Ratio

    1. A ratio comparing the value of a position protected via a ...
  4. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
  5. Short (or Short Position)

    1. The sale of a borrowed security, commodity or currency with ...
  6. Currency Pair

    The quotation and pricing structure of the currencies traded ...
Related Articles
  1. The 0 and 00 on the roulette wheel were introduced to break the martingale's mechanics by giving the game more than two possible outcomes.
    Forex Education

    Forex Trading The Martingale Way

    Martingale's mechanics involve an initial bet; however, each time the bet becomes a loser, the wager is doubled such that, given enough time, one winning trade will make up all of the previous ...
  2. Forex Education

    Why It's Important To Regulate Foreign Exchange

    In an increasingly globalized economy, the significance of the foreign exchange marketplace cannot be underestimated.
  3. Forex Education

    Forex: Wading Into The Currency Market

    We go over the ground rules and available resources needed for this undertaking.
  4. Forex Education

    Commodity Prices And Currency Movements

    Find out which currencies are most affected by fluctuations in gold and oil prices, and improve your trading.
  5. Forex

    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 pairs are quoted as such because a currency is only valuable in relation ...
  6. Forex Education

    Top 7 Questions About Currency Trading Answered

    Whether you're puzzled by pips or curious about carry trades, your queries are answered here.
  7. Forex Education

    Global Trade And The Currency Market

    Learn how the Bretton Woods system got the ball rolling for world trade.
  8. Forex Education

    The Foreign Exchange Interbank Market

    Can your forex broker offer you the most competitive pricing? Learn how the market's biggest players affect you.
  9. Forex Education

    Spread-To-Pip Potential: Which Pairs Are Worth Day Trading?

    Spreads play a significant factor in profitable forex trading. Learn when it's worth trading and when it isn't.
  10. Forex Education

    Popular Forex Currencies

    Learn about the most traded currencies and the strategies used to trade them.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center