How to read margin data and use it in trading?

Margin data helps to understand market sentiment and the level of risk. They include:

🔹 Increase in margin debt – indicates how much traders are borrowing to trade. If this indicator rises sharply, it may signal increased volatility or an approaching significant price movement.

🔹 Ratio of long and short positions – reflects whether more traders are betting on growth (longs) or decline (shorts).

Let's consider $CAKE :

📊 The latest jump in margin debt indicates increased interest, but at the same time, the share of longs is decreasing, which may indicate concerns about further declines. So, while activity has increased, it is worth evaluating additional factors before entering a position.