The Long-Short Ratio of contracts is actually divided into two categories:

These are the Long-Short Ratio of the number of people and the Long-Short Ratio of the trading volume.

The Long-Short Ratio is actually quite easy to understand. It refers to the ratio of the number of people who actively go long to those who actively go short over a certain period of time. Since the contract positions in the futures market are always 1:1 between long and short, the ratio of people cannot reflect the market's capital sentiment.

Moreover, the number ratio actually reflects the difference between retail investors and large holders in the market;

When the price is fluctuating sideways, if the Long-Short Ratio is very low, it indicates that retail investors are shorting, while large funds are buying at the close, and vice versa. Therefore, for me, this data is not very meaningful as it only reflects data that has already occurred in the market and does not have a predictive nature.

As for the Long-Short Ratio, it refers to the ratio of the amount of capital actively shorting or actively going long in the market over a certain period of time. It usually has a noticeable correlation with price; when the price drops, the Long-Short Ratio often decreases, and vice versa.

From this perspective, the Long-Short Ratio represents the direction of momentum in the futures market. After all, a large amount of capital shorting or going long will inevitably lead to price changes.

However, even so, due to the presence of the spot market, large fluctuations in futures funds do not necessarily dominate prices completely. Therefore, only in a volatile market does the Long-Short Ratio have some reference value, while in a trending market, it is not very meaningful.

Therefore, I hardly look at the Long-Short Ratio data. If you need data that can reflect the actual situation of the futures market, I recommend referring to the funding rate and basis (the difference between spot and futures). The former can reflect the aggressiveness of the short-term futures market, while the latter can indicate whether the contradictions between the futures market and the spot market are unified.

Just like that~