45% of volume sold short is normal — reading short interest properly
The most misread number in retail research. Short volume is not short interest, and half of it is market makers doing their job.
If you have ever pulled up a ticker and seen “44% of volume sold short”, your next thought was probably about a squeeze. It should not have been. That figure is, for most liquid US equities, completely ordinary.
Two different numbers with similar names
Short interest is the number of shares currently held short, reported twice a month, usually expressed as a percentage of float. This is the one people mean when they talk about crowded shorts. Above roughly 20% of float is genuinely elevated.
Short volume is the share of a day’s trading volume that was executed as a short sale. It is reported daily and it is a completely different quantity.
Confusing them is the single most common error in retail short analysis, and data feeds encourage it by labelling both “short”.
Why short volume runs at 40-50% for healthy stocks
Because a market maker filling your buy order is, mechanically, selling short.
When you hit the offer and no seller is queued, the market maker sells you shares it does not have and buys them back moments later. That sale is flagged as a short sale. It is not a bet against the company; it is the plumbing.
Across liquid US names, this pushes short volume to a baseline in the 40-50% range on ordinary days. A stock at 45% is not under attack. A stock at 45% is being traded.
What is actually informative
- Short interest as a percentage of float, tracked over time. The level matters less than the direction: rising short interest into a rising price is a real disagreement.
- Days to cover (short interest divided by average daily volume). This is the number that decides whether a squeeze is mechanically possible. Twelve days to cover in a 20%-of-float short is a different situation from half a day.
- Borrow cost, where you can see it. Expensive borrow means the short side is paying to stay, which is information the share count alone does not carry.
Why we ship the base rate next to the number
When we started handing this data to our AI assistant, it read “45% of volume sold short” as extreme short interest and started reasoning about a squeeze — confidently, and citing the number correctly. The number was right. The interpretation was wrong, and it was wrong in a way that produced a plausible, well-argued, entirely misleading paragraph.
The fix was not a better prompt. It was to put the yardstick in the data itself: the block now carries a note stating that 40-50% is normal and why.
Every number that invites a misreading now ships with its own point of comparison. If a figure needs context to mean anything, the context travels with the figure — not in a footnote that the reader, or the model, will skip.
That principle has caught more problems than any single data source we have added. A model that quotes its numbers can be checked; a model handed numbers without their scale will produce confident nonsense from correct inputs.
Short interest, short volume and days to cover sit next to the price and the filings on every instrument page, each with its base rate attached.