High Short Interest Squeeze

🧨 High Short Interest Squeeze Strategy

A favorite among momentum traders, the High Short Interest Squeeze Strategy focuses on stocks with unusually high short interest that begin to spike, often triggering a violent move upward as short sellers rush to cover. These setups can offer extreme risk/reward, but they require fast decision-making and disciplined execution.

🔍 What is a Short Squeeze ?

A short squeeze occurs when a stock that is heavily shorted starts to rise rapidly, forcing short sellers to cover their positions by buying shares—this accelerates the price surge.

Key ingredients of the High Short Interest Squeeze Strategy :

• Short Float > 20–25%

• Catalyst (news, earnings, social media buzz, etc.)

• Strong volume and early momentum

• Low float (amplifies the move)

🧠 Psychology Behind the Move

Short squeezes are not just technical events—they’re driven by fear. As prices climb, short sellers experience losses. At a certain point, they’re forced to exit (buy back), adding buying pressure to the rally.

The result: a fast, vertical move that can last minutes or hours.

📈 Setup Criteria

• Short interest above 20% (Finviz, Ortex, Fintel)

• Relative volume > 3x daily average

• Gap up or strong premarket

• Consolidation breakout on intraday chart

• Heavy social sentiment (X, Reddit, StockTwits)

⏰ Ideal Timeframes

• Intraday: 1-minute and 5-minute

• Confirmation: breakout on strong volume

• Entry: on breakout above consolidation or VWAP reclaim

• Stop: tight under VWAP or previous low

• Target: key levels, psychological round numbers

⚠️ Risk Management

• Highly volatile—only trade with pre-defined risk

• Use small size relative to other setups

• Avoid chasing after the first large candle

• Always have a hard stop

✅ Summary Checklist

🔗 Where to Use It

Use this strategy in The Next Trading Day under category:
📉 High Short Interest Squeeze Strategy