Categories: Trading

Short Interest Ratio

The Short Interest Ratio is also referred to as short interest in technical analysis. This metric is used used to gauge the level of bearish sentiment in a particular stock or security. This ratio is used to measure the number of shares that have been sold short as a ratio of the total shares outstanding.

What does the short-interest ratio indicate?

A high short-interest ratio is interpreted as a large number of short sellers that are betting against the stock. This indicates that the market may be expecting a price decline in the near future. On the other hand, a lower short-interest ratio indicates that there is limited bearish sentiment in the market and furthermore, the stock may be poised for a price increase.

How to use the Short interest ratio?

The short interest ratio is used by traders as a tool to identify potential market trends and to make investment decisions. Traders can use this ratio in combination with other technical analysis indicators, such as price patterns, momentum indicators, and volume, to help form a better and more precise view of the market.

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