Long and short positions across the entire market are clearly equal in size, so why does the long/short ratio deviate from 1?
My understanding: the long/short ratio reflects how positions are distributed, not the direction of the market. When one side becomes particularly crowded, a move in the opposite direction may trigger a cascade of stop-losses.
The large-trader long/short ratio looks at accounts in the top 20% by margin balance and divides their total long positions by their total short positions.
Back to the market: $BTC is at 73691.38, 24h -0.22%.
My understanding: the long/short ratio reflects how positions are distributed, not the direction of the market. When one side becomes particularly crowded, a move in the opposite direction may trigger a cascade of stop-losses.
The large-trader long/short ratio looks at accounts in the top 20% by margin balance and divides their total long positions by their total short positions.
Back to the market: $BTC is at 73691.38, 24h -0.22%.