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The Member Short Ratio (or MSR) shows the short selling activity of NYSE members, who trade on the floor of the exchange (the 'smart money'). If the members are short, they expect prices to fall in the short-term. It is, of course, inversely proportional to the Public Short Ratio - e.g. if Members are 40% short, the public must be 60% short (there are only 2 sides to any position!). In theory, you would be wise to be short when the members are short, and long when they are long, as you will then be following the 'smart money'. As a day trader, following the smart money is really the best way to make life easy on yourself, although be warned, even 'smart' money make mistakes sometimes!

To calculate the MSR, divide (total number of member short sales minus public short sales) by (total number of short sales). This gives a percentage indicating the Member Short Ratio.

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