There has been a good deal of discussion back and forth here on the topics of short interest and short volume.  I thought it might be helpful to shed some light on the important distinction between these two.

Think of short interest as a photograph at a given point in time of the total number of shares held short as of that precise moment (most often, the end of a quarter or a month).

Think of short volume as a movie covering the activity of a trading day (or longer period), which captures on film the total number of shares shorted during that day.

And finally, think of the short volume percentage as the fraction that results from dividing the total number of shares shorted during that day by the total number of shares traded for that day.

The really critical point to understand here is that short volume for a given trading day or other period is not a number that can be added to existing short interest to derive the new short interest total.  The reason for that is that the short volume on any given day measures only the shares shorted and takes no account of the share trades made to close short positions.  Most typically, a very high percentage of short trades will be closed on the same day resulting in a short interest at the end of the day that is little changed from the short interest at the beginning of that day.

How and why does this happen?  Welcome to the world of HFT (high-frequency trading), where the bots hit the market with a staccato of relatively small trades, the net effect of which is to drive the SP down on moderately low volume.  At that point (or on closely following days), shares are purchased at the new, lower prices to close out the shorts.  So the net change in short interest is often very small even when the short volume is very large.

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