The True Differences Between Long Squeezes and Short Squeezes

Still interested in investing in the markets? All right! As you might have guessed, you have a lot to learn in terms of charts and data, but that’s okay — you can learn everything you need right there!

One term that keeps popping up in a lot of financial outlets is the “squeeze”. If you’re trying to keep up with what’s being said and having a hard time, you might need to actually read up on the concepts behind what’s being discussed. In this case, you need to understand long and short squeezes in order to figure out not only what they are, but how to handle them as they relate to your trading strategies.

Simply put, a squeeze of any kind is the market price temporarily moving against the longer term direction. This is a “squeeze” primarily when the movement is by a larger amount than first imagined. The squeeze will continue to move forward in the direction expected, but it might take a while.

A long squeeze tends to be the worse, because it’s when the market shifts downwards by a huge amount that tends to throw you off. Does it go back up? Yes, in time — you could be caught by a long squeeze for quite some time. This means that instead of being able to stay in a position as you imagine, you might have to use your stop loss function to back out of the trade before it really starts costing you a lot of money.

Avoiding the long squeeze will come in time. As a newcomer to day trading, you might find that you have to back out of positions a lot more often than you would like. However, over time you will get better at seeing when a long squeeze is going to occur. This is also why it’s so important to make sure that you’re actually reading the markets as they stand rather than just going through the motions and assuming everything can be handled by the chars along. Financial news really does make a difference, and press releases from businesses that are within the market sector still matter a great deal as well.

What about short squeezes? This is going to be just like the long squeeze, but a bit shorter. You will need to make sure that you adjust your position and go through your options either way.

And it cannot be stressed enough — you nee dot make sure that you’re actually learning true trading systems rather than just trading gimmicks. These are part of those “tips” that you hear thrown out on TV without proper analysis of the markets themselves. New traders tend to latch onto these in hopes of making fast money. It’s better to actually make sure that you can focus on the bigger picture rather than just sweeping in for profits without having any idea of how to make more profits.

We will cover just about every angle of investing that you can think of so that at the end of the day, you’re going to become an amazing trader!