Let's have a look at two ways that we can talk about the size of the futures, market volume, and open interest or OI. Starting with volume. Volume is quite simply a tally of the trading activity for a specific futures contract. During a single trading session, it starts at zero when the market opens and is reset back to zero after the market closes throughout the trading day, the volume accumulates representing the number of contracts that have been bought and sold. This figure is crucial for traders who are assessing the liquidity of a futures contract. A high volume often indicates a vibrant market with ample opportunities to enter and exits. Open interest is a different story altogether. This term refers to the total number of outstanding futures contract that remain open, which means those that have not yet been settled by an offsetting trade or delivered upon. It's the sum of all the market's commitments, and as such, it serves as a barometer for the amount of risk borne by users of these products. Let's bring these concepts to life with an example. Imagine a new futures contract that has just hit the market when trading starts. In this contract both volume and open interest are zero since no one has had the chance to trade this new product yet. Now, suppose trader A steps up and initiates the first trade purchasing 100 contracts. Trader B is on the other side of this deal, as all contracts must have a buyer from a seller, selling 100 contracts. This maiden transaction increases the volume to 100 as that's the number of contracts that have exchanged hands. Meanwhile, the open interest also climbs to 100 because we now have 100 long positions held by trader A and 100 short positions held by trader B. Now, trader B decides to reduce their position by buying back 50 contracts, which trader C fulfills by selling 50 contracts of their own. This second transaction propels the volume to 150 as 50 more contracts have been transacted. However, the open interest remains stead at 100. Why? Because while trader A has reduced their short position, trader C has stepped in to replace it. There's still a balance of 100 long and 100 short positions. Finally, let's consider a third trade. Trader C opts to close out their position by buying back the 50 contracts that they initially sold. This time, trader A is the counterparty choosing to liquidate half of their long position, and another 50 contracts changed hands boosting volume to 200 for the day. However, open interest has now decreased to 50 for both A and C. This trade reduces the existing exposure that they have effectively closing those 50 contracts.