Short Interest Ratio


DEFINITION of 'Short Interest Ratio'

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 the market has for a specific stock.

Also known as the "short ratio".

Short Interest Ratio

BREAKING DOWN 'Short Interest Ratio'

This ratio provides a number that is used by investors to determine how long it will take short sellers, in days, to cover their entire positions if the price of a stock begins to rise. The short interest ratio can also 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 five or greater, this can be taken as a bearish signal, and vice versa.

  1. Short-Interest Theory

    A theory which holds that a security with a high degree of short ...
  2. Short Covering

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  3. Short Selling

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  4. Short Squeeze

    A situation in which a heavily shorted stock or commodity moves ...
  5. Short (or Short Position)

    A short position is the sale of a borrowed security, commodity ...
  6. Volume

    The number of shares or contracts traded in a security or an ...
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