$AKE Large traders’ long/short ratio: 1.39 (58.2% long / 41.9% short), compared with 1.21 one hour ago.
I used to think that a long/short ratio skewed toward longs meant there were more long positions than short positions across the entire market. It took me a while to realize that every long position is matched by a short position, so the market always has the same number of longs and shorts. The large-trader long/short ratio only looks at the top 20% of accounts by margin ranking and is calculated by position size; it shows which side this group is betting on.
A heavily skewed long/short ratio can persist for quite a while. Trading against it based on this factor alone could carry considerable risk.
Don’t change your original plan based solely on a single number, and certainly don’t use borrowed money to test what a reading means.
I used to think that a long/short ratio skewed toward longs meant there were more long positions than short positions across the entire market. It took me a while to realize that every long position is matched by a short position, so the market always has the same number of longs and shorts. The large-trader long/short ratio only looks at the top 20% of accounts by margin ranking and is calculated by position size; it shows which side this group is betting on.
A heavily skewed long/short ratio can persist for quite a while. Trading against it based on this factor alone could carry considerable risk.
Don’t change your original plan based solely on a single number, and certainly don’t use borrowed money to test what a reading means.