This script plots the Short Sale Restriction (SSR) Level relative to the previous day's closing price. It works on any time frame from 1 minute to daily, showing the correct level even during the extended session.
The Short Sale Restriction (SSR) is a rule of the Securities and Exchange Commission (SEC) that restricts traders from short-selling stocks that are rapidly decreasing in value in an attempt to profit from the price drop. The rule was introduced in 2010, after the 2008 financial crisis, to prevent market manipulation and excessive volatility. The SSR works as follows: when the price of a particular stock drops 10% compared to the previous day's closing price, the SSR is triggered and a temporary limitation is imposed on traders' ability to short-sell that stock for the rest of the trading day and the following day. During the SSR activation period, traders can still short-sell, but only if the sale is "covered" by another long position on the same stock. Knowledge of the SSR level is especially important for day traders because it helps them to plan their trading strategies in advance, avoiding situations where short-selling becomes more difficult. Additionally, if a stock has exceeded the SSR threshold, traders can expect an increase in price volatility.
Suddenly and for no apparent reason, the script stopped working properly on daily charts. This is likely due to some changes in TradingView's functionality. Until it's resolved, I suggest not using it.
flamingstudios
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the logic where it either gets today close or yesterday's close is flawed, which makes the script's calculation wrong
valpatrad
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@flamingstudios, I think your comment could be more helpful if you explained in detail what you mean.
flamingstudios
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@valpatrad, would gladly help but first explain the logic behind using either yesterday's close or today's close? I mean, why are choosing one or the other?
valpatrad
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Well... maybe you should have asked me to explain the logic behind the calculation before saying it is wrong. Anyway, it is pretty simple:
When the market is open, the script uses "close[1]" as a reference value to calculate the SSR level. On the daily chart, "close[1]" corresponds to the closing price of the session prior to the currently active one. When the market is in extended hours, on the other hand, the script uses "close" as a reference value to calculate the SSR level. On the daily chart, "close" represents the closing price of the last candlestick. This allows us to know if the price reaches the SSR level that will be in effect in the incoming market session. Since the SEC's SSR Rule does not take into account the price movement during the extended sessions, the value is just kept fixed for future reference.
Using this logic, the SSR value will remain the same during extended trading hours and the incoming market session. I honestly don't see anything wrong with it, but please feel free to share any observations.
valpatrad
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Errata corrige: When the market is open, the script uses "close(1)" as a reference value to calculate the SSR level. On the daily chart, "close(1)" corresponds to the closing price of the session prior to the currently active one.
(I don't know why but TradingView removes square brackets and their content in the comments)