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Long Squeeze

A long squeeze occurs when the price of a security drops sharply, forcing investors holding long positions to sell their assets to limit losses. This selling pressure further drives down the price, amplifying the losses for other long investors. A long squeeze can be triggered by negative news, market sentiment shifts, or unexpected price movements. It is the opposite of a short squeeze, where prices rise sharply due to short sellers covering their positions.

Example

After negative earnings news, the stock price of a company falls rapidly, causing investors with long positions to sell their shares, leading to a long squeeze.

Key points

• Occurs when a sharp drop in price forces long investors to sell, causing further price declines.

• Triggered by negative news, market sentiment changes, or unexpected events.

• The opposite of a short squeeze, where prices rise rapidly due to short sellers covering positions.

Quick Answers to Curious Questions

A long squeeze can be triggered by negative news, unexpected price drops, or shifts in market sentiment.

It amplifies selling pressure, driving prices down further as more long investors are forced to sell to avoid further losses.

A long squeeze involves a sharp price drop forcing long investors to sell, while a short squeeze occurs when prices rise rapidly due to short sellers covering positions.