Short Ratio

Short ratio

Number of shares of a security that investors have sold short divided by average daily volume of the security (measured over 30 days or 90 days). There are various interpretations of this ratio. When people short, it is usually (but not always) because they are pessimistic about the security's future performance. Shorting involves buying at at some point however. Hence, some would interpret a high short ratio as an indicator that there will be some buying pressure on the security that would increase its price.

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Short Ratio

In technical analysis, a ratio of short sales made by investors to the total trading volume on a given trading day. Investors often sell short when they expect security prices to fall. Thus, a high short ratio is considered a bearish signal, while a low ratio is thought to be bullish.

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Short Interest Ratio

What Does Short Interest Ratio Mean?

A sentiment indicator that is derived by dividing the short interest by the average daily volume for a stock. This indicator is used by both fundamental and technical traders to identify the prevailing sentiment in the market for a specific stock. Also known as the short ratio. It is calculated as shown here:

Investopedia explains Short Interest Ratio

This ratio helps investors determine how long (in days) it will take short sellers to cover their entire short positions if the price of a stock begins to rise. The short interest ratio also can be applied to entire exchanges to determine the sentiment of the market as a whole. If an exchange has a high short interest ratio of around 5 or greater, this can be taken as a bearish signal.

Related Terms:
• Short (or Short Position)
• Short Covering
• Short Interest
• Short Squeeze
• Volume