Risks of the short squeeze
There are a few key risks we wanted to highlight before you consider trading the short squeeze strategy.
There could be an initial spike in the stock’s price, but this could be a false positive signal if it occurs without an increase in volume. At CAPEX, we provide our customers with a fantastic amount of trading support and advice, so you know what other trading signals and indicators to look out for that confirm this is a short squeeze. If you get it wrong, you could be at risk of losing money in your open position.
Fall in stock price
Outside influences such as short sellers or news announcements from companies can affect the stock’s price. Other investors and traders alike would thrive as the price falls because they then have the opportunity for greater returns. It’s a good thing to make sure that the price is not just stable, that it continues to rise. Otherwise, a short squeeze may never occur, and again you could suffer losses as a result.
If you’re overly eager or predict the price increase at the wrong time, it could harm your funds and force you to cover short positions at huge losses. It could happen if you follow the rumours of other traders or if you have incorrectly speculated specific movements. It’s a good idea to notice the error sooner rather than later to avoid the risk overall.
Conclusion – Trade CFDs on stocks at CAPEX
Overall, I hope you’ve been able to understand the short squeeze meaning and its importance to various traders and investors. Our online platform has several stocks that have seen a surge in price and gone through the short squeeze.
If you want to pursue this method, join CAPEX today and take advantage of the facilities we offer.. Our stocks broker demo account is available to all our customers as it allows you to practice stock trading techniques without spending your money first. In addition, we have various amounts of resource material to help you develop the ins and outs of the stock market, whatever stage of your trading journey.