O que é short selling? Significado completo de short e guia de como lidar com ele

Global financial markets are experiencing increasing volatility, and investors are engaging not only in traditional long positions but also in short selling. However, the risks of short selling are not only due to fundamental changes but also a deadly threat — Short Squeeze (軋空). What exactly does a short squeeze mean? Why does it cause massive losses for the short side? This article will delve into the essence, causes, and practical strategies to respond to short squeeze行情.

Three Ways to Short and the True Meaning of Short Squeeze

Before understanding what a short squeeze is, it is essential to clarify how short selling works. There are three main methods for short investors:

Borrowing stocks to short — Borrowing stocks from long-term shareholders and paying interest; profit from the difference when buying back after the stock price drops.

Futures trading — Posting margin to short directly, but requiring rollover at expiry and facing margin call risks.

CFD contracts — Using margin system similarly, no rollover needed, but risks remain.

The core logic of Short Squeeze (嘎空意思) is: when the price of an asset being shorted rises rapidly, short investors are forced to close their positions at higher prices due to margin calls. Their buyback actions further push up the stock price, creating a spiral of rising prices and a vicious cycle.

Short squeeze can be categorized into two types: one is a rapid rebound of the stock price causing passive liquidation; the other is a well-funded group deliberately pushing up the stock price to create losses for short sellers. In any case, the result is severe losses for the short side, sometimes even risking liquidation.

Why Do Short Squeeze行情 Occur Frequently?

Short squeeze is not a random event but triggered by specific market conditions.

Speculative funds actively target high short positions

When the short ratio of a stock exceeds 50% of the circulating shares, it becomes a market target. The GME short squeeze事件 in 2021 is a typical example.

GME is a game retail store chain that has suffered losses for years due to declining business. Many Wall Street investment banks held bearish views, and institutional investors borrowed and shorted heavily, with total short positions exceeding 140% of the company’s total shares. However, this news sparked outrage on Reddit’s WSB forum — they believed it was Wall Street bullying retail investors.

In January 2021, retail investors united to buy GME shares to launch a counterattack. The stock price soared from $30 to $483 within two weeks. Short investors, triggered by margin calls, were forced to buy back at high prices, incurring losses of over $5 billion. After the event, the stock price quickly fell back, dropping over 80% within a week. Subsequently, WSB retail traders also speculated on high short stocks like AMC, BlackBerry, etc., which experienced rapid surges and quick declines.

Natural buying due to fundamental improvement

Sometimes, short squeeze is not manipulated but caused by genuine fundamental improvements. Tesla is a prime example.

Tesla had been unprofitable for years before Elon Musk took over, and despite being viewed as the future of electric vehicles, it became a heavily shorted target on Wall Street. It wasn’t until 2020 that the company turned profitable, with the Shanghai Gigafactory significantly contributing to revenue, prompting a surge in stock price. In just half a year, the stock rose from $350 to $2318, nearly six times. After a 1-for-5 stock split, the price soared past thousands within a year, and over two years, the cumulative increase reached 20 times, causing massive losses for short sellers.

The difference in such short squeeze cases is that the price increase is supported by fundamentals, but the losses for short positions are still enormous.

Practical Strategies to Respond to Short Squeeze行情

To manage the risk of short squeeze, short investors should take the following actions:

1. Monitor short positions and technical signals

When short interest exceeds 50% of circulating shares, even if the stock price remains weak, reduce positions early or close all. Use RSI indicator as a supplement: RSI below 20 indicates oversold conditions, with a high risk of reversal. At this point, stop-loss and exit immediately. Small gains or losses are less important; staying alive is the priority.

2. If participating in short squeeze speculation, timing is key

If investors aim to profit from short squeeze行情 (going long), they must closely monitor short covering progress. As long as short interest continues to increase and RSI stays between 50~80, holding may be possible. But once signs of short covering appear, take profits immediately, because the short squeeze will end, and the stock price will quickly revert to a reasonable level. Such buying is purely technical chasing, not based on fundamental improvements.

How to Avoid Short Squeeze Risks and Execute Short Selling Strategies Smoothly

The necessary condition for a short squeeze is excessively high short interest and high market attention. Therefore, avoiding short squeeze involves:

Choosing the right targets — Prefer large-cap indices or blue-chip stocks, as they have high liquidity and are less prone to excessive shorting.

Timing is crucial — In a bear market, wait for rebounds before shorting; avoid blindly shorting during downward declines.

Select tools carefully — Borrowing stocks to short can face forced buy-ins; CFD contracts are more flexible, allowing investors to control leverage.

Diversify to balance risks — For example, go long on individual stocks while shorting the index. If the allocation ratio is 1:1, profits are achieved when the stock outperforms the index in gains or underperforms in losses.

Short sellers must remember: short squeeze行情 can wipe out years of gains in an instant. Therefore, besides closely monitoring order flow and short interest, it is vital to pay attention to changes in stock fundamentals and news. A single positive news can ruin a carefully laid short position; safety exits should always be the top priority.