How should you use the long/short ratio? Let’s use $BTC as an example: Top traders’ long/short ratio is 1.59 (61.3% long / 38.7% short), compared with 1.57 an hour ago.
I usually look at it in three steps:
① Check for extremes: It’s leaning toward an extreme right now, and the crowded side is often vulnerable to a stop-hunt wick.
② Check the change: Long positions have increased compared with an hour ago.
③ Check for divergence: Price is down 1.79% over 24h, yet more traders are going long as the price falls. Watch out for a long squeeze.
Sentiment is a lagging indicator, so don’t rely on it too heavily.
#BTC
This is not investment advice. Trade at your own risk.
I usually look at it in three steps:
① Check for extremes: It’s leaning toward an extreme right now, and the crowded side is often vulnerable to a stop-hunt wick.
② Check the change: Long positions have increased compared with an hour ago.
③ Check for divergence: Price is down 1.79% over 24h, yet more traders are going long as the price falls. Watch out for a long squeeze.
Sentiment is a lagging indicator, so don’t rely on it too heavily.
#BTC
This is not investment advice. Trade at your own risk.