Public Short Ratio or PSR
Public Short Ratio (PSR) or Non-member Short Ratio is a market sentiment indicator used by traders to find trading opportunities. PSR shows the relationship between number of public (retail) short sells and number of total short sells for a given period.
The basic assumption behind Public short ratio is that public (or retail traders) are poor short sellers compared to institutional and stock-exchange member short sellers. So going against public can create opportunities. Although this assumption is not always true, historic statistics shows that this strategy has a high percentage of success. PSR offer better results when it is used in conjunction with other technical analysis tools and indicators.
Public short ratio is a simple market indicator, which is easy to interpret. PSR is usually represented as a line of 10 day moving average of the closing price of PSR. If the PSR moving average is above 25%, then the public sentiment is bearish and if PSR moving average is below 25%, then public sentiment is bullish. The more the time PSR stays on a particular trend, the more the chance of a trend change. Likely the more the PSR move from 25% range, the more the chance of a market retracement.
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Public Short Ratio = Total Public Short Sells / Total short sells
The basic assumption behind Public short ratio is that public (or retail traders) are poor short sellers compared to institutional and stock-exchange member short sellers. So going against public can create opportunities. Although this assumption is not always true, historic statistics shows that this strategy has a high percentage of success. PSR offer better results when it is used in conjunction with other technical analysis tools and indicators.
Public short ratio is a simple market indicator, which is easy to interpret. PSR is usually represented as a line of 10 day moving average of the closing price of PSR. If the PSR moving average is above 25%, then the public sentiment is bearish and if PSR moving average is below 25%, then public sentiment is bullish. The more the time PSR stays on a particular trend, the more the chance of a trend change. Likely the more the PSR move from 25% range, the more the chance of a market retracement.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by Daniel Pipitone at
6:46 AM
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