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Help me understand short ratios
Posted on 3/8/21 at 9:50 pm
Posted on 3/8/21 at 9:50 pm
Short interest ratio/ days to cover - 0.8
What does this mean?
What does this mean?
Posted on 3/8/21 at 10:38 pm to Guntoter1
Days to cover are calculated by taking the number of currently shorted shares and dividing that amount by the average daily trading volume for the company in question.
It can help with determining how much pressure will be put on shorts if the price starts moving up. The days to cover represent the total estimated amount of time for all short sellers to buy back the shares that were lent to them by a brokerage.
.8 suggests an 8/10 ratio. short interest (8) divided by daily volume (10).
It can help with determining how much pressure will be put on shorts if the price starts moving up. The days to cover represent the total estimated amount of time for all short sellers to buy back the shares that were lent to them by a brokerage.
.8 suggests an 8/10 ratio. short interest (8) divided by daily volume (10).
Posted on 3/8/21 at 10:54 pm to go ta hell ole miss
Thanks.
So 0.8 would be a high amount of shorted stock vs the amount of shares traded daily ?
Now. Since I have no experience with understanding this, ... can you interpret this for me ? Lol
So 0.8 would be a high amount of shorted stock vs the amount of shares traded daily ?
Now. Since I have no experience with understanding this, ... can you interpret this for me ? Lol
Posted on 3/9/21 at 2:33 am to Guntoter1
Still trying to understand how shorts lower the price
Found this, not shorts but manipulation
Spoofing The Tape
Spoofing, also known as layering, the tape is when sophisticated short-term investors place orders in the market with no intention of having them filled. Other investors see the large orders waiting to be executed, believing that a market whale is trying to buy or sell at a certain price. Therefore, the investor places their order at the same level to buy or sell.
Seconds before the market trades at the price of the large order, the order is pulled from the market, and the retail investor's order is filled. After the spoofer pulls the order, the market drops, resulting in losses for anyone unfortunate enough to be tricked into buying.
Found this, not shorts but manipulation
Spoofing The Tape
Spoofing, also known as layering, the tape is when sophisticated short-term investors place orders in the market with no intention of having them filled. Other investors see the large orders waiting to be executed, believing that a market whale is trying to buy or sell at a certain price. Therefore, the investor places their order at the same level to buy or sell.
Seconds before the market trades at the price of the large order, the order is pulled from the market, and the retail investor's order is filled. After the spoofer pulls the order, the market drops, resulting in losses for anyone unfortunate enough to be tricked into buying.
Posted on 3/10/21 at 9:17 pm to Guntoter1
quote:
So 0.8 would be a high amount of shorted stock vs the amount of shares traded daily ?
ince I have no experience with understanding this, ... can you interpret this for me ?
I suppose it is relative but I do not consider that to be high. Usually a high days-to-cover ratio might be an indication that there are likely problems with company performance. If 2 million shares are short for a stock with a 1 million daily volume average then the short ratio is 2, which is significantly higher than the .8 in your scenario.
Also keep in mind a short interest tracker is only reported to investors every two weeks. Because of this, it is possible the data may already be somewhat outdated by the time you read about it.
This post was edited on 3/10/21 at 9:31 pm
Posted on 3/10/21 at 9:22 pm to ReadyPlayer1
quote:
Still trying to understand how shorts lower the price
They borrow the stock and immediately sell it to get their money. They buy it back one day, hopefully a lot lower, and they pocket the difference.
The sale of the stock after it’s borrowed puts selling pressure on the stock as it increases the supply of sellers.
This post was edited on 3/10/21 at 10:56 pm
Posted on 3/10/21 at 10:28 pm to ReadyPlayer1
quote:
Spoofing The Tape
If you really want to see how effective that can be, check out the story of Navinder Singh Sarao who was deemed to be most responsible for the massive flash crash in 2010. It's as crazy a story as you can imagine. Dude did it from his bedroom in his parents house in a poor neighborhood of London. Here's a good 25 min video on it:
The Wild $50M Ride of the Flash Crash Trader Youtube
Posted on 3/10/21 at 10:31 pm to Diseasefreeforall
Market makers use short selling in their regular operations, which is different than traders betting against the stock, so sometimes the short interest is misleading. I see a lot of OTC investors crying foul at short interest when it's just market makers doing their daily thing.
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