How do you use the long/short ratio? Let’s use $ETH as an example: the overall account long/short ratio is 3.28 (76.6% long / 23.4% short), compared with 3.38 an hour ago.
I generally look at it in three steps:
① Check for extremes: The current ratio is somewhat extreme, and the crowded side is more vulnerable to a shakeout in the opposite direction.
② Check the change: There are more short positions than an hour ago.
③ Check for divergence: The price is down 2.59% over 24 hours, yet there are still more long positions. Keep an eye on stop-losses for long positions.
Don’t use a single data point to judge the market; combining indicators is more reliable.
This is purely my personal opinion. Please consider it with caution.
I generally look at it in three steps:
① Check for extremes: The current ratio is somewhat extreme, and the crowded side is more vulnerable to a shakeout in the opposite direction.
② Check the change: There are more short positions than an hour ago.
③ Check for divergence: The price is down 2.59% over 24 hours, yet there are still more long positions. Keep an eye on stop-losses for long positions.
Don’t use a single data point to judge the market; combining indicators is more reliable.
This is purely my personal opinion. Please consider it with caution.
