$ETH Large-holder long/short ratio: 1.65 (62.2% long / 37.8% short).
I used to think that a long/short ratio above 1 meant there were more long positions than short positions across the entire market. It took me a while to understand that the total volume of long and short positions across the market is always equal. The large-holder long/short ratio looks at the positions of the top 20% of accounts by margin: these large holders are leaning long, while all the other accounts combined are leaning short.
Extreme long/short ratios can persist for a long time. Trading against the trend based on the ratio alone can be very risky.
Don’t chase a trade at the most volatile moment; wait for the price to settle before deciding.
I used to think that a long/short ratio above 1 meant there were more long positions than short positions across the entire market. It took me a while to understand that the total volume of long and short positions across the market is always equal. The large-holder long/short ratio looks at the positions of the top 20% of accounts by margin: these large holders are leaning long, while all the other accounts combined are leaning short.
Extreme long/short ratios can persist for a long time. Trading against the trend based on the ratio alone can be very risky.
Don’t chase a trade at the most volatile moment; wait for the price to settle before deciding.
