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If you’ve ever observed a security hardly moving throughout the session despite abnormally high volume, it might just be a short seller or group of short sellers opening trades. For example if a day trader wishes to remove resistance by buying upwards heavily, they might unknowingly be allowing a short seller to open a short position. Likewise, a short seller’s open short sell order may allow a bullish trader to enter a position. Therefore if you’ve ever heard of traders saying “slap the ask” they might actually be filling a short sellers position to their demise. However in the right conditions a short seller wanting a small profit may find themselves being squeezed as the buyers provide liquidity while the short seller attempts to exit their heavily losing trade and are forced to decide whether to remain short or buy at the ask to exit the short.

Compare the short volume to the reaction of the price action. Typically lower float stocks react more strongly to short volume high float stocks sustain a lesser impact. You may also notice short volume increasing into an event such as trial results or earnings reports.