What is meant by Short Squeeze?


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In financial markets including forex trading, stock trading, crypto trading, sometimes an event called a Short Squeeze occurs.

The term describes asset prices rising sharply due to many short sellers being forced out of certain positions. Where short sellers will bet that the price of an asset will fall. However, if the price increases, the short position starts to generate losses and is forced to close its position.

The opposite of a short squeeze, namely a long squeeze, is used for a similar effect that will occur when a buy position is trapped by selling pressure, leading to a sharp price spike downwards.

Short Squeeze is usually characterized by a sudden increase in buying pressure for an asset which is triggered by many stop losses and short sellers buying back simultaneously which increases buying volume which then makes the price rise very quickly.
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But is it possible for traders to make a profit in these conditions, to learn how to trade a Short Squeeze you can learn in the FXOpen blog article with the title "Is It Possible to Trade a Short Squeeze?" published on April 2, 2024.
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