Short squeeze

When trading short, you contribute to the size of the stock's down volume since you're selling shares. By shorting a stock, you're selling shares you do not own, but because you're required to give back the shares you borrowed, you will eventually buy that stock back which contributes to the up volume. We said earlier that volume pushes a stock's direction to which it is heavier, a stock moving upwards means the demand for it overwhelms supply. A short squeeze happens when short sellers are taking profit by buying back their borrowed shares, a heavily shorted stock will eventually pop higher when short traders are buying to cover for profit. A good news about the company would send waves of buy orders from bullish investors hoping that the stock would go higher. This scenario puts heavy pressure on short sellers because an appreciation in the stock price is imminent. A positive investor sentiment plus short traders buying back to cover would trigger another wave of buy orders from other short traders who are forced to cover due to losses or an eroding profit.

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