$ETH Large Trader Long/Short Position Ratio: 1.76 (63.7% long / 36.3% short), compared with 1.75 one hour ago.
I used to think that a long/short ratio above 1 meant there were more long positions than short positions across the entire market. It took me a while to understand that the large trader long/short ratio doesn’t reflect the market as a whole. It compares the long and short positions held by the top 20% of users by margin. Long and short positions across the entire market are always equal, so when these large traders hold more longs, the remaining accounts must hold more shorts.
The long/short ratio alone can’t tell you which way the market is headed. It’s usually compared with open interest, funding rates, and price.
Reading indicators is easy; the hard part is sticking to your rules when emotions are running highest.
These are solely my personal views and should not be used as a basis for trading.
I used to think that a long/short ratio above 1 meant there were more long positions than short positions across the entire market. It took me a while to understand that the large trader long/short ratio doesn’t reflect the market as a whole. It compares the long and short positions held by the top 20% of users by margin. Long and short positions across the entire market are always equal, so when these large traders hold more longs, the remaining accounts must hold more shorts.
The long/short ratio alone can’t tell you which way the market is headed. It’s usually compared with open interest, funding rates, and price.
Reading indicators is easy; the hard part is sticking to your rules when emotions are running highest.
These are solely my personal views and should not be used as a basis for trading.