hey what's going on everyone thanks for checking out this video my name is Travis from master the
market and this is going to be a quick video talking about the craziness that we've seen in
the stock market over the past couple of days with gamestop i'm going to break down that situation
and explain exactly what a short squeeze in the stock market is so hopefully you can use that
information to be more prepared for the next one in case you feel that you've missed out on the
gamestop situation so anyway with that being said it's very important that you first know exactly
what short selling is to understand of course what a short squeeze in the stock market is
and simply put what short selling is is a way of trading that allows you to profit from a stock
actually going down and to do that what you do is you borrow shares from your broker that you're
going to sell high and then ideally the price of the stock is going to fall and you're going to
be able to buy those shares back lower and profit the difference between where you bought and sold
so in other words let's take gamestop for example and just look at this intraday chart here if you
were to buy gamestop early on in the morning here today at 300 per share and then it spikes up and
you sell at 380 dollars per share in that case you would have made 80 per share on your investment
and the same is actually true if you would have short sold at three hundred and eighty
dollars per share and then later on covered that short position at three hundred dollars per share
again profiting eighty dollars per share but this time you're simply selling high
first and then buying low later on okay so now that you know a little bit about how short selling
in the stock market works it's also very important that you understand how supply and demand affects
the stock market in order to understand a short squeeze so uh with that being said
at the end of the day the stock market is going to move solely based on supply and demand
many people think that things like news and press releases are the sole reason that stock
prices go up and down but realistically what those things do is simply impact the amount of supply
or demand at a certain level for any given stock and that supply and demand is then what is going
to directly affect the price of that stock so in the market the demand is represented by the buyers
and the supply is represented by the sellers simply put when there are more buyers than
there are sellers at any given price that's going to cause the stock price to rise from that level
and on the opposite side of the spectrum when there are more sellers than there are buyers at
that price the buyers are simply not going to be able to break through the sellers and that's going
to cause the prices to fall from wherever that level is at so anyway with all of that being said
what a short squeeze in the stock market is is when there's a very heavily shorted stock that is
going to continue to rise up and once it continues to rise the short sellers are forced to actually
exit out of their short positions in order to cut losses and manage risk and to exit out of those
short positions the way that they do that is to actually buy back those shares that they borrowed
and the short sellers buying back those shares in addition to anyone else that's simply buying the
stock causes a lot of demand for that stock and is what then causes the stock to continue spiking up
and squeezing higher and higher and higher so the more shorts that there are stacked into a stock
the more potential it has for a big short squeeze in the market as those short sellers
start to cover and buy back those shares so with the gamestop situation what happened is gamestop
was a very heavily shorted stock in fact there were actually major hedge funds with billions
of dollars worth of shares short selling gamestop and what happened was retail traders like you and
i all kind of came together especially of course on the subreddit wall street bets and started to
pretty much simultaneously buy into gamestop of course causing a ton of demand pushing the stock
price higher and as it went higher and higher and higher hedge funds started to lose billions and
billions of dollars and they realistically had no choice but to cover out of those short positions
hence causing the major short squeeze that we saw in gamestop along with other stocks such as
spce amc bed bath and beyond blackberry and even many others over the past week or so
so i wanted to share this website which is highshort interest dot com and what they do is
show you which stocks in the market have a very high percentage of their float being short sold
making them of course good candidates for a potential short squeeze in the near future
and of course at the top of this list you can see gamestop and some of the other big runners
over the past couple of weeks but you have to keep in mind that even though gamestop was a very well
known one short squeezes do happen very often in the stock market gamestop was not the first one
and it's definitely not going to be the last one so it can be very beneficial to check out this
list on a pretty regular basis and keep in mind which stocks have been heavily shorted keep an eye
out for them because they may be another potential short squeeze candidate in the near future
and another way that you can keep an eye out for the next potential game stop
situation in the next potential short squeeze candidate is to go over to the website finbis
and finviz actually has a free screener on the website in case you haven't used it yet
um and all you do is go up to your screen or at the top and what we're looking for is these
high short interest stocks so we're going to go to float short of at least 30 percent
and we also want to see that there's strong volume associated with these stocks
because if you look at any of the big runners over the past week gamestop amc blackberry bed bath and
beyond nokia or whatever it may be all of them had very strong relative volume associated with
their short squeezes as well so in order to find those stocks we're going to go ahead and select a
relative volume over two just to kind of narrow this list down a little bit further and this is
going to give you a list of stocks that all again have a high amount of their float being short sold
along with a recent spike up in their volume which at the end of the day are the two main
things that can cause a major short squeeze in the stock market okay so i know this was a very quick
video compared to some of the other ones here on my channel but i just wanted to simplify as
best as i could the situation that's been going on with gamestop because i know a lot of new traders
have been getting into the market and looking to take advantage of this short squeeze opportunity
but anyway with that being said thanks for checking out the video i hope it helped and
if you want to find more information about how to day trade swing trade and even long term invest i
have a ton of education in the videos here on my channel so make sure to check those out and
subscribe if you don't already and you can of course check out our master the market programs
which are going to be linked down below in the description as well but anyway thanks again for
watching i hope you enjoyed and good luck with your trading i'll see you in the next video
you