{"id":4014,"date":"2023-03-10T23:21:30","date_gmt":"2023-03-10T23:21:30","guid":{"rendered":"https:\/\/fisdomdevel.wpengine.com\/glossary\/short-squeeze\/"},"modified":"2023-03-10T23:21:30","modified_gmt":"2023-03-10T23:21:30","slug":"short-squeeze","status":"publish","type":"post","link":"https:\/\/www.fisdom.com\/glossary\/short-squeeze\/","title":{"rendered":"Short Squeeze"},"content":{"rendered":"<p>\nA \u2018Short Squeeze\u2019 occurs in stock markets when traders\u2019 position goes in the opposite direction of what they had assumed for and then they have to \u2018cover for\u2019 or initiate an action or else, get \u2018squeezed\u2019, resulting in huge losses.<\/p>\n<h2>Short Squeeze Explained<\/h2>\n<p>1. Traders generally take short positions in stocks which they think are \u2018overvalued\u2019 and assume the prices will go down and thus they can profit by buying them back.<br \/>\n2. However, the prices start moving up, due to strong or positive news related to those stocks or due to a sudden surge in demand.<br \/>\n3. The traders will not be able to buy the stock back at a low price, as it is moving up, in the opposite direction of their position.<br \/>\n4. Thus they will have to either buy more shares at a higher price and pay back to the broker at a loss (in case of leveraged position) or buy more shares at higher prices, hoping to sell them for profit later.<br \/>\n5. The increased buying will still keep moving the prices up. This phenomenon is known as \u2018Short Squeeze\u2019.<\/p>\n<h2>How to prevent Short Squeeze<\/h2>\n<p>Short Squeeze can be prevented to some extent by:<br \/>\n1. Hedging short positions with long positions.<br \/>\n2. Placing appropriate \u2018Stop-losses\u2019 or \u2018buy-limit\u2019 orders.<\/p>\n<h2><\/h2>\n<h2><\/h2>\n<h2><\/h2>\n","protected":false},"excerpt":{"rendered":"<p>A \u2018Short Squeeze\u2019 occurs in stock markets when traders\u2019 position goes in the opposite direction of what they had assumed for and then they have to \u2018cover for\u2019 or initiate an action or else, get \u2018squeezed\u2019, resulting in huge losses. Short Squeeze Explained 1. Traders generally take short positions in stocks which they think are [&hellip;]<\/p>\n","protected":false},"author":67,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[11],"tags":[],"class_list":["post-4014","post","type-post","status-publish","format-standard","hentry","category-stocks"],"_links":{"self":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts\/4014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/users\/67"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/comments?post=4014"}],"version-history":[{"count":0,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts\/4014\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/media?parent=4014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/categories?post=4014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/tags?post=4014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}