The ratio of long to short positions in perpetual contracts. Extreme long dominance often precedes a correction.
How Long/Short Ratio is calculated
>1.5 = crowded longs (bearish signal); <0.7 = crowded shorts (reversal opportunity).
How to read it
- Sentiment and derivatives metrics change quickly and are useful for gauging crowding and leverage risk.
- Extreme readings often coincide with short-term volatility; manage position size and liquidation distance before taking a view.
Limitations and common misreads
- Historical thresholds come from a limited sample; future cycles can differ.
- Data providers can define the metric differently; cite the data date when quoting it.
- A single indicator is not investment advice and does not guarantee price direction.
Related indicators
Research and education only; not investment advice.
