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If, for example, NoGood Co. reported better-than-expected earnings and its stock price jumped to $120, then panicked short-sellers might rush to close out their positions before the share price kept climbing. This sudden high demand could cause the stock’s price to rise even more sharply to $130 or $140 per share. Short squeezes can be caused by high short interest, positive news or market sentiment, and sudden price increases or atfx trading platform<\/a> strong buying pressure.<\/p>\n<\/p>\n During a short squeeze, short-sellers run the risk of losing a substantial amount of money if the stock price continues to increase. Short selling is when a short seller predicts that the value of a stock will decrease. To profit, the short seller will borrow the stock from their brokerage to sell and then purchase the stock back later at a lower price. If all goes as planned, the difference between what the short seller sold the stock for and the amount that they bought it back for becomes their profit. Panic-buying begets more panic-buying, egged on by speculators who know the situation the short sellers are in and actively try to put the screws to them.<\/p>\n<\/p>\nRisks of trading in a short squeeze<\/h2>\n<\/p>\n