How do you use the long/short ratio? Take $XRP as an example: the platform-wide account long/short ratio is 2.53 (71.7% long / 28.3% short), compared with 2.71 an hour ago.
I generally look at it in three steps:
① Check for extremes: It’s already quite extreme, and the side that’s heavily dominant may be vulnerable to a reversal-driven shakeout;
② Check the change: Short positions have increased compared with an hour ago;
③ Check for divergence: The 24-hour price change is -4.24%. The price is falling, yet long positions still dominate, so watch out for a long squeeze.
Changes that persist in the same direction for several hours are more informative than a one-off jump.
Just my personal observation, not investment advice. Please be aware of the risks.
I generally look at it in three steps:
① Check for extremes: It’s already quite extreme, and the side that’s heavily dominant may be vulnerable to a reversal-driven shakeout;
② Check the change: Short positions have increased compared with an hour ago;
③ Check for divergence: The 24-hour price change is -4.24%. The price is falling, yet long positions still dominate, so watch out for a long squeeze.
Changes that persist in the same direction for several hours are more informative than a one-off jump.
Just my personal observation, not investment advice. Please be aware of the risks.