Here is something I recently read on short volume.
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Posted On: 10/17/2024 1:52:22 PM
Here is something I recently read on short volume. I'm not an expert on this stuff at all, but I found it interesting if true. I think the short pressure theory may be overblown in the CYDY context, but again, I'm not an expert in this area - just passing along what I found.
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https://www.reddit.com/r/wallstreetbets/comme...rt_volume/
Short volume doesn't mean what the vast majority of the regards here think it means.
They correlate it directly with short interest.
FINRA has a report, that comes out daily... this report is designed to be consolidated with the exchange data. It is off-exchange transaction data. This is where "short volume" comes from.
If you look at this data, you'll find that for most equities, the short volume is between 30 and 70 percent, on any given day.
That does not in any way mean that that percentage of the volume that day were actually new short positions.
There's a reason for this. Because of the way brokers handle transactions, it is exceedingly common for them to take your order, blindly, and execute it from their internal pool of equities. That is entirely for execution reasons. So, if you sell, say 1000 shares of X at the bid, they sell 1000 shares of X at the bid from their pool (even if they don't have any). Because of FINRA rules, this is reported as a "short sale". They then journal your 1000 shares to themselves. You have made a constructive sale of your long position to someone else, and the transaction is reported to FINRA as "short volume". The reason that this journaling of your shares to your broker is invisible is because that is not a reportable transaction to FINRA.
If there were truly 50% of all volume in any given equity initiating a new short position, the market would have insanely high short interest at all times. And it does not.
The vast majority of transactions corresponding to volume are actually market participants buying and selling long positions.
For the love of all that is holy, please stop misinterpreting "short volume".
It does not mean what you thought it meant.
Investors Hangout: https://investorshangout.com/messages/view?id...z8owE6qukD
_____________________________________________________
https://www.reddit.com/r/wallstreetbets/comme...rt_volume/
Short volume doesn't mean what the vast majority of the regards here think it means.
They correlate it directly with short interest.
FINRA has a report, that comes out daily... this report is designed to be consolidated with the exchange data. It is off-exchange transaction data. This is where "short volume" comes from.
If you look at this data, you'll find that for most equities, the short volume is between 30 and 70 percent, on any given day.
That does not in any way mean that that percentage of the volume that day were actually new short positions.
There's a reason for this. Because of the way brokers handle transactions, it is exceedingly common for them to take your order, blindly, and execute it from their internal pool of equities. That is entirely for execution reasons. So, if you sell, say 1000 shares of X at the bid, they sell 1000 shares of X at the bid from their pool (even if they don't have any). Because of FINRA rules, this is reported as a "short sale". They then journal your 1000 shares to themselves. You have made a constructive sale of your long position to someone else, and the transaction is reported to FINRA as "short volume". The reason that this journaling of your shares to your broker is invisible is because that is not a reportable transaction to FINRA.
If there were truly 50% of all volume in any given equity initiating a new short position, the market would have insanely high short interest at all times. And it does not.
The vast majority of transactions corresponding to volume are actually market participants buying and selling long positions.
For the love of all that is holy, please stop misinterpreting "short volume".
It does not mean what you thought it meant.
Investors Hangout: https://investorshangout.com/messages/view?id...z8owE6qukD
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