What is a Short Squeeze in trading ?
A short squeeze in trading A short squeeze occurs when the price of a stock rises sharply, forcing short sellers to buy shares to exit their positions. In buying shares to cover their short positions, short sellers end up pushing the stock price even higher. Bullish traders see this buying activity and jump in as well, adding further upward pressure to the share price. In this way, a relatively small bullish movement can trigger in a cascade of buying activity. Short squeezes typically happen only when the short interest in a stock is very high. It takes a lot of short sellers buying shares to push the price of a stock strongly upward. Short squeezes are usually short-lived and end when short sellers have fully exited their positions or stop buying shares to cut their losses. Short Squeezes vs. Breakouts Short squeezes and breakouts both involve strong bullish movements in the price of a stock. However, the underlying dynamics are very different. In a short squeeze, a stock’s upwa...