How long does SSR last?

The rest of the day it triggers and all of the next trading day. If the stock falls 10% below the previous close again while restricted, the restriction runs through the following day too.

A trade during regular hours, 9:30 a.m. to 4:00 p.m. ET, at a price 10% or more below the previous day's close on the listing exchange.

Does SSR apply in the pre-market and after hours?

Pre-market and after-hours trades cannot trigger it. Once it is on, though, the restriction applies whenever quotes are published, so it covers the next morning's pre-market as well.

Is SSR bullish or bearish?

Neither on its own. It removes one source of selling pressure, which can help a bounce, but it says the stock has already fallen hard, and nothing stops holders from selling.

How do I know if a stock is on SSR tomorrow?

Any stock that triggers today is restricted all of tomorrow. The listing exchanges publish the list, and most trading platforms show an SSR tag on the quote.

Was there a short sale rule before Rule 201?

Yes. The old uptick rule limited short sales on listed stocks until the SEC removed it in 2007. Rule 201, which replaced it, applies only after a 10% drop.

Glossary

SSR: the short sale restriction (Rule 201)

SSR, the short sale restriction, is the SEC's Rule 201 circuit breaker: once a stock falls 10% or more below the previous day's close, short sales in it may only execute at a price above the current national best bid. The restriction lasts for the rest of that day and the whole of the next trading day.

Why it matters to a small-cap momentum trader

For a short seller, SSR takes away the easy entry. You cannot hit the bid; you have to offer above it and wait for a buyer to take your shares, which is hard on a stock that is falling fast. Small caps that faded hard yesterday are often on SSR today, so a trader planning to short a morning spike needs to check first. Long traders watch it too: with shorts kept off the bid, a falling stock loses one source of selling.

The rule

Trigger. The stock's price falls 10% or more below the previous day's closing price on its listing exchange.

Duration. The rest of that trading day and all of the next trading day.

What is allowed. Short sales at a price above the current national best bid. A short order that was above the bid when it was first displayed may still fill at its price after the bid rises to meet it. Selling shares you own is not restricted.

Since when. Rule 201 has applied to stocks listed on US exchanges since February 2011, and the 10% trigger and its timing have not changed since, so every day you can replay falls under the same rule.

SSR in Hindsight Markets

SSR comes from the flag the exchanges published that day, at the moment they published it, so it switches on in a replay when it did in the market. The Level 2 header shows it. Under SSR, a market short or a short limit at or below the bid is refused with the reason; a short limit above the bid rests and can fill when a buyer lifts it. A hard-to-borrow stock needs a locate first, which is a separate check from SSR.

A worked example: the trigger price and where a short can sit

An illustration with made-up numbers, not a real stock or a real day.

Trigger price. Yesterday's close was 4.00. Ten percent below it is 4.00 × 0.90 = 3.60. The first regular-hours trade at 3.60 or lower turns SSR on.

How long. It triggers on a Tuesday at 11:00 a.m., so the restriction runs to the end of Tuesday and through all of Wednesday. If on Wednesday the stock falls another 10% below Tuesday's close, it runs through Thursday as well.

Where a short can sit. On Wednesday the stock bounces to a bid of 3.50 and an offer of 3.54. A short at 3.50 is at the bid and is not allowed. A short limit at 3.51 is above the bid, so it is allowed, and it fills only if a buyer comes up to it.

Common mistakes small-cap traders make with SSR

Thinking SSR bans shorting. It does not. It moves you from hitting the bid to offering above it, which changes how you enter, not whether you can.
Measuring from the wrong price. The trigger is 10% below yesterday's close, not today's open, and only regular-hours trades count. A stock down 20% in the pre-market is not on SSR until it trades that low after 9:30.
Forgetting the second day. A stock that collapsed yesterday is still restricted today, even if it opens green.
Reading SSR as a buy signal. It keeps shorts off the bid, but holders can still sell, and stocks on SSR can keep falling.
Mixing up SSR and borrow. SSR says where a short may trade. It does not find you shares to borrow; a hard-to-borrow stock still needs a locate.

Common questions

How long does SSR last?: The rest of the day it triggers and all of the next trading day. If the stock falls 10% below the previous close again while restricted, the restriction runs through the following day too.
What triggers SSR?: A trade during regular hours, 9:30 a.m. to 4:00 p.m. ET, at a price 10% or more below the previous day's close on the listing exchange.
Does SSR apply in the pre-market and after hours?: Pre-market and after-hours trades cannot trigger it. Once it is on, though, the restriction applies whenever quotes are published, so it covers the next morning's pre-market as well.
Is SSR bullish or bearish?: Neither on its own. It removes one source of selling pressure, which can help a bounce, but it says the stock has already fallen hard, and nothing stops holders from selling.
How do I know if a stock is on SSR tomorrow?: Any stock that triggers today is restricted all of tomorrow. The listing exchanges publish the list, and most trading platforms show an SSR tag on the quote.
Was there a short sale rule before Rule 201?: Yes. The old uptick rule limited short sales on listed stocks until the SEC removed it in 2007. Rule 201, which replaced it, applies only after a 10% drop.

How to practise it in Hindsight Markets

Open a past day and run the Top Losers scan after 9:30. A name that has traded 10% or more below yesterday's close in regular hours is on SSR, today and tomorrow.
Open the next trading day for one of them. The SSR tag sits in the Level 2 header, next to the borrow tag.
Try a market short. It is refused with the reason. Then place a short limit one cent above the bid and watch whether a buyer lifts it.
If the borrow tag says HTB, request a locate before you short.
Compare your fill with where the stock went in the journal, and note how long the limit waited.

Practice this on a real past day in Hindsight Markets

Pick a day after a small cap collapsed, try to short the next morning's bounce under SSR, and learn where your limit has to sit to get filled.