Volume and open interest both measure activity, but they answer different questions. Volume is the total value of every trade a market has ever processed. Open interest is the value still held in live positions right now. The same market can show enormous volume while only a small slice of that money is actually at stake — and that gap is where the signal is.
The difference in one line
Volume counts churn: every buy and sell adds to it, even if the same dollars flip in and out a hundred times. Open interest counts commitment: it only reflects positions that are still open. If traders pile in and then close out before resolution, volume keeps climbing while open interest stays flat.
Why the ratio tells you about conviction
When open interest is high relative to volume, money came in and stayed — the behaviour of people taking a view and holding it. When volume towers over open interest, you're looking at flow: lots of trading, little of it held. On prediction markets this split is real and visible. Politics and macro markets tend to concentrate held capital, while sports markets generate huge turnover from quick in-and-out bets.
There's a second reason to weight open interest. Volume is the easier number to inflate — trades can be churned or wash-traded to make a market look busier than it is. Open interest is capital actually locked into positions, so it's a harder figure to fake and often a cleaner read on whether real money is committed.
How Edge Radar uses it
Edge Radar shows open interest as a share of a market's all-time volume. A high reading means the money that traded is largely still in positions — conviction, not churn — which is a useful filter for finding markets where participants are committed rather than just passing through. Read it alongside spread and liquidity to judge whether you can actually act on what you find.
FAQ
What is the difference between open interest and volume?
Volume is the cumulative value of every trade a market has ever processed — it counts churn. Open interest is the value currently held in live, un-redeemed positions. A market can have huge volume from traders flipping in and out, while only a fraction of that money is actually still at stake.
Why does a high open-interest-to-volume ratio matter?
It signals conviction. A high ratio means money came in and stayed in positions rather than churning through, which is the pattern of capital allocators taking a view. It's also a harder number to fake than volume, since open interest is capital actually locked in the market rather than trades that can be wash-traded back and forth.