Positioning & flow · Chapter 10 of 31
What is the long/short ratio?
The balance between traders positioned long versus short, and why a lopsided crowd can become fuel for a reversal.
The long/short ratio compares how many traders, or how much position value, is betting on a rise versus a fall. A ratio above 1 means longs outnumber shorts; below 1 means the opposite.
A crowd, not a compass
It is a sentiment gauge, not a direction. When almost everyone is already long, most of the buying may be done, and there are many stop-losses sitting below the market that a small drop can trigger.
Contrarian at the extremes
The signal is most useful at extremes. A heavily crowded long can unwind sharply on bad news because there is little fresh buying left, and forced selling feeds on itself.
How to read it here
We show the current long/short ratio per instrument. Treat a stretched, one-sided reading as a sign of fragile positioning, not as a trade on its own.
Now watch this signal update in real time across the market.
See it liveEducational content, not financial advice.