How do you use the long/short ratio? Let’s use $ETH as an example: large traders’ long/short position ratio is 1.42 (58.8% long / 41.3% short) (1.44 one hour ago).
I usually look at it in three steps:
① Check for extremes: it’s not crowded right now, so it has limited relevance;
② Check the change: short positions have increased compared with one hour ago;
③ Check for divergence: the price is down 5.64% over 24h, but longs still outnumber shorts despite the price falling—watch out for long-position stop-losses.
Trading along with market sentiment can easily lead you to chase at the top and sell at the bottom.
#ETH
I usually look at it in three steps:
① Check for extremes: it’s not crowded right now, so it has limited relevance;
② Check the change: short positions have increased compared with one hour ago;
③ Check for divergence: the price is down 5.64% over 24h, but longs still outnumber shorts despite the price falling—watch out for long-position stop-losses.
Trading along with market sentiment can easily lead you to chase at the top and sell at the bottom.
#ETH