Regarding the long-short ratio of futures, many people's concept has always remained in the last cycle, that is, "when the long-short ratio is high, it is bearish, and when the long-short ratio is low, it is bullish";
But in fact, if you have been paying attention to this data since 23 years in this bull market, you will find that the long-short ratio is no longer an inverse index, and the high or low long-short ratio is not meaningful from the perspective of the number of people.
A big reason is that the market has become more mature;
As shown in the figure, the long-short ratio below is the number of people, and the long-short ratio above is the volume ratio of active transactions;
For example, the long-short ratio that continues to fluctuate around 0.67 means that in the past week, there were many people who actively shorted, but the funds were not much. Why do you say that?
Because if you look at the ratio of active long and short transactions, you will find that it is not that low, but is still increasing;
This shows that small funds have frequently actively shorted in the past week, while large funds are long. Although there are many small funds, the total amount of funds is small. Even if 100 people short, the total amount is less than 10 million US dollars, but a large long order of a large investor can offset these selling orders;
Therefore, paying attention to the ratio of active trading volume of the long-short ratio is far more important than the number of people. Most of the time, retail investors in this futures market always like to touch the top and buy the bottom, rather than chasing the rise and fall, mainly because of the path dependence brought about by the volatile market in the past six months;
What we should pay attention to is the ratio of active trading amount, which represents the changes in the overall supply and demand of the market, and the number of long-short ratio represents the attitude of the market. At present, most people in the market still do not think that the bull market will continue, but even so, there are always a lot of funds actively going long.
In other words, if the long-short ratio above begins to decline significantly, the price may fall. The long-short ratio cannot dominate the price rise and fall, but the long-short ratio of funds actively traded can;
