For example, if there is an upward price breakthrough in the futures market, accompanied by huge trading volume, then this is a signal that the upward trend will be stronger. If the market soars sharply or hits a new high, but it is accompanied by a downturn in transactions, it means that the trend is doubtful. If the price reaches a new high or a new low, the trading volume decreases, which is a signal that the price has approached or reached the top or bottom. If the turnover increases and the price deviates from the trend, then this trend may be coming to an end. This is called disagreement. Generally speaking, the turnover will increase with the development of the trend. In the upward trend, the volume will increase with the trend of the rising market on the same day and decrease in the falling market on the same day. In the downward trend, the situation is just the opposite. Changes in short positions are also used to help investors identify other technical signals, which can help traders judge how much new funds are flowing into or out of the market. These two important figures are very helpful for investors to judge a trend.
Another commonly used trading rule is that if the trading volume and short positions increase, the trend will continue in the direction; If the volume and short positions decline, it may be a signal that the trend is coming to an end.
There are still some differences between the volume of empty orders and the volume of transactions: the volume of empty orders has seasonal characteristics in many markets, that is, it is higher at some times of the year and lower at other times. The seasonal law of short positions is very important for investors to analyze the market. If the price is on the rise and the total amount of short positions is higher than the seasonal average (5-year average), it means that new funds have flowed into the market, buying is strong and a bull market has emerged.
However, if the price rises and the short position falls below the seasonal average, then this increase may be caused by the short stop loss and the funds are flowing out of the market. This is a weak situation and the rebound will fail. So is the downward trend.