Cumulative Net Longs & Shorts (CLS & CLSD)

Definition

Cumulative Net Longs & Shorts

The Cumulative Net Longs & Shorts (CLS) indicator tracks the net difference between long and short positions over time, providing insight into the overall directional bias of market participants. It aggregates the total net positioning from longs and shorts across a given timeframe (e.g., daily, 4-hour, or 1-hour), offering a dynamic view of market sentiment and positioning trends.

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Key Components:

1. Cumulative Net Longs: The aggregated total of long positions after subtracting closed long positions over time.

2. Cumulative Net Shorts: The aggregated total of short positions after subtracting closed short positions over time.

3. Cumulative Net Longs & Shorts Delta (CLSD): The difference between Cumulative Net Longs and Cumulative Net Shorts, calculated as:

Delta = (Cumulative Net Longs) − (Cumulative Net Shorts)

• Positive Delta: Indicates that long positions dominate net positioning.

• Negative Delta: Indicates that short positions dominate net positioning.

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Visualization:

• Cumulative Net Longs & Shorts: Typically displayed as two separate lines on a chart:

  • Net Longs Line: Represents the cumulative total of long positions.

  • Net Shorts Line: Represents the cumulative total of short positions.

• Cumulative Net Longs & Shorts Delta: Displayed as a bar graph to visualize the net difference between longs and shorts.

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Why It Matters:

• Directional Bias: Highlights imbalances between long and short positioning trends.

• Trend Confirmation: Persistent dominance of longs or shorts can indicate strong directional conviction.

• Reversal Signals: Sudden shifts in delta values may signal potential trend reversals.

The Cumulative Net Longs & Shorts indicator, along with the Cumulative Net Longs & Shorts Delta, provides a comprehensive view of market positioning dynamics, helping traders identify sentiment trends, potential reversals, and key liquidity zones.