How do you use the long/short ratio? Take $APR as an example: the platform-wide account long/short ratio is 1.69 (long 62.9% / short 37.1%) (1.85 one hour ago).
I usually look at it in three steps:
① Check for extremes: it's already leaning toward an extreme, and the crowded side is more vulnerable to being wiped out by a price wick;
② Check the change: there are more short positions than one hour ago;
③ Check for divergence: the price is up 34.17% over 24 hours, with no obvious divergence at the moment.
Divergence between sentiment and price is what deserves the most attention.
I usually look at it in three steps:
① Check for extremes: it's already leaning toward an extreme, and the crowded side is more vulnerable to being wiped out by a price wick;
② Check the change: there are more short positions than one hour ago;
③ Check for divergence: the price is up 34.17% over 24 hours, with no obvious divergence at the moment.
Divergence between sentiment and price is what deserves the most attention.