How do you use the long/short ratio? Let’s take $Q as an example: the overall account long/short ratio is 0.54 (35.3% long / 64.8% short), compared with 0.55 one hour ago.
I usually look at it in three steps:
① Check for extremes: It’s already quite extreme, and the heavily one-sided crowd is often caught out by a sharp wick.
② Check the change: More traders are short than one hour ago.
③ Check for divergence: The price is up 40.55% over 24 hours, yet there are still more shorts. Watch out for a short squeeze.
Sentiment tells you what the market is thinking, but it doesn’t tell you where the market will go next.
#Q
This is not investment advice. Don’t blindly copy it.
I usually look at it in three steps:
① Check for extremes: It’s already quite extreme, and the heavily one-sided crowd is often caught out by a sharp wick.
② Check the change: More traders are short than one hour ago.
③ Check for divergence: The price is up 40.55% over 24 hours, yet there are still more shorts. Watch out for a short squeeze.
Sentiment tells you what the market is thinking, but it doesn’t tell you where the market will go next.
#Q
This is not investment advice. Don’t blindly copy it.