Chapter 5
What is Long/Short Ratio?
Market positioning indicator
What is Long/Short Ratio?
Long/Short Ratio shows the ratio of long positions to short positions in the market. If greater than 1.0, longs are dominant; if less, shorts are dominant. This data is generally pulled from Binance futures and reveals the overall tendency of market participants.
Why does Long/Short Ratio matter?
- Excessively long-heavy markets carry the risk of short squeeze or long liquidation cascade
- When Long/Short ratio and funding rate are evaluated together, the market's tendency is clearly understood
- Excessively one-sided positioning increases the risk of reverse movement: excessively high long ratio = potential correction risk
- When Long/Short ratio and funding rate are evaluated together, the market's tendency is clearly understood
- Excessively one-sided positioning increases the risk of reverse movement: excessively high long ratio = potential correction risk
How to use Long/Short Ratio?
Contrarian Signal: Excessively high long ratio + high OI + positive funding = market is excessively optimistic, correction risk is high. Excessively high short ratio + negative funding = upward squeeze potential.
This content is for education and analysis only, not investment advice. Market tools offer probability and context, not certainty; the decision is the user responsibility.