How do you use the long/short ratio? Let’s use $ETH as an example: the platform-wide account long/short ratio is 3.15 (75.9% long / 24.1% short) (3.26 one hour ago).
I usually look at it in three steps:
① Check for extremes: It’s already fairly extreme, and the crowded side is more vulnerable to a shakeout in the opposite direction;
② Check the change: There are more shorts than an hour ago;
③ Check for divergence: The 24h price change is -6.09%. The price is falling, but longs still dominate—watch out for a long squeeze.
Use the data as a reference, not as your steering wheel.
I get it wrong a lot too, so make your own judgment.
I usually look at it in three steps:
① Check for extremes: It’s already fairly extreme, and the crowded side is more vulnerable to a shakeout in the opposite direction;
② Check the change: There are more shorts than an hour ago;
③ Check for divergence: The 24h price change is -6.09%. The price is falling, but longs still dominate—watch out for a long squeeze.
Use the data as a reference, not as your steering wheel.
I get it wrong a lot too, so make your own judgment.