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5 Steps To Mastering The Short Squeeze Phenomenon

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Written by Timothy Sykes
Updated 10/4/2023 9 min read

While the overall market continues to get battered and Treasury yields hitting 16-year highs…

There are still incredible trading opportunities if you’re a day trader.

Best of all, you don’t have to be a short seller to take advantage of them.

In fact, the only way to play this recent trading phenomenon is on the long side.

Short squeezes, in particular, have become the boogeyman of trading—a force that can either skyrocket your account or leave it in ruins.

I’ll show you how to use them to your advantage in five steps.

Why We’re Still Seeing Short Squeezes While The Market Is Getting Wrecked

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While the latest action in the market is striking fear into investors…it has a totally different feeling for traders.

You see, day traders typically end their day in cash. They don’t care if the overall market is up or down.

The only thing they care about is volatility.

As a trader, volatility is what creates opportunity.

Now, with the overall markets getting hammered, we can expect most stocks to track the market.

However, if you stick to small-cap penny stocks with catalysts, you’ll find some that trade opposite the market.

For example, over the last week, ticker symbols BNOX, ICU, APRN, FEMY, and GRTS have risen by more than 100%.

Shady brokers are over-allocating shares, and overaggressive shorts are burying themselves, creating massive short squeezes.

I’ve written about this extensively on this blog.

As well as made videos on it.

You can check out my latest one below. Just click play:

Now, let’s discuss the five steps you must nail to master short squeeze trading.

#1 Swiftly Cut Your Losses: No Ifs, Ands, or Buts

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The reason why most short sellers suck isn’t because their ideas are bad.

In fact, they are probably right 90% of the time.

Where they mess up, and where I lose total respect for them, is their total disregard to risk management.

They are stubborn and have a sound strategy for managing risk.

As a trader and mentor, I can’t respect that.

Every time I’ve lost big, I was too stubborn to admit I was wrong.

I’m constantly preaching to my students to protect their capital.

You must learn to cut losses quickly.

It’s the bedrock of smart trading.

The moment a trade isn’t panning out as you anticipated, step back, reevaluate and if necessary, get out.

Trading isn’t about pride…it’s about strategy.

#2 Be the Master of Your Trade

top penny stocks list Tim Sykes on a cliff in Italy with a laptop
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I want all my students to be self-sufficient.

And while I share my trade ideas and watchlist with them, I don’t want them to follow me into trades.

At the end of the day, you need to do what works for you.

Unfortunately, when I look around, all I see is herd mentality.

Traders are jumping into discord chat rooms…chasing trades…and copying other traders’ ideas.

It’s even more toxic among short sellers.

Because they all think the same things. It’s like they are all looking for the same information to justify their decision to be short.

And because so many crowd around the same trades…they all get wrecked together.

The stock market isn’t a follow-the-leader game. Carve your path, and ensure every decision is backed by robust research and understanding.

#3 Have A Plan and Stick To It

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You look at your screen and see a stock up 40%, 50%, 60%, or even 100%…

Everyone on social media discusses how it can be the next great squeeze play.

But you can’t simply jump into a fast-moving stock without a plan.

These stocks are volatile and trade in wide ranges.

Remember, the reason why we’re seeing so many short squeezes is because these stocks will appear weak at times, sucking in more shorts, trapping them, and then squeezing the heck out of them.

That’s why you MUST have a plan.

If you’ve been following me, you know I’m waiting for big movers who experience a panic sell-off, specifically near or around the open. But lately, I’ve been experimenting with different times.

For me, it’s offered the best risk vs. reward.

However, that’s not the only way to play these moves.

For example, my good friend Tim Bohen, the lead trainer at StocksToTrade, hates dip buying and prefers buying breakouts.

There are many ways to play short squeezes, as long as you have a plan.

#4 Think Like A Trader, Not An Investor

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These are all just trades.

Get in…take your profits or cut your losses quickly.

Rinse and repeat.

Don’t get into the newbie mindset of “This is gonna be the play that changes my life,” “This is going to the moon,” or “HODL.”

Remember, the biggest squeezes are happening primarily in the crappy companies.

Crappy companies often use these squeezes as an opportunity to do toxic financing, dilute shareholders and destroy their stock.

That’s why I say the shorts are often right…

Don’t get greedy when you’re playing these short squeeze plays.

Most of these stocks have no place in anyone’s long-term portfolio.

And most of them should never be held overnight.

#5 Arm Yourself With The Right Tools

is reverse merger good
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Forget about the toxic chatrooms and discord channels.

If you want actionable insight, then you must have the right tools.

For me, it’s simple: it’s the StocksToTrade Breaking News service.

They’re constantly keeping me informed in as close to real-time as possible.

For example, this last week alone, they spotted plays in:


Source: StocksToTrade Breaking News


Source: StocksToTrade Breaking News

And NIR:

Source: StocksToTrade Breaking News

Day trading is all about speed…and no one is better than the StocksToTrade Breaking News service. 

Ready to Master the Short Squeeze Phenomenon? 📈

high frequency trading
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As the market whirls in unpredictability and stocks defy the norms, the old rulebook is tossed out the window.

Short sellers are bewildered, and those without the right strategies are left in the dust.

But for the informed trader, this chaos is nothing but a goldmine of opportunities. 🚀


🔥 Discover the secrets of riding the wave of short squeezes, not getting drowned by them.

🔥 Uncover the anomaly of stocks that rise like phoenixes amidst a plummeting market.

🔥 Learn to swiftly cut your losses, master your trades, stick to a plan, think like a trader, and arm yourself with the real-time tools that set winners apart.

But how can you transform this knowledge into actionable, profitable steps in your trading journey?

🚀 Join our exclusive live training session.

🚀 Unravel the 5 pivotal steps to mastering short squeeze trading, fortified with live examples and real-time analysis.

🚀 Receive personalized insights, tailored to equip you to turn market volatility into a playing field of opportunities.

🚀 Become the trader who thrives in uncertainty, with strategies proven to win in the current market climate.

Are you ready to turn the tables and exploit the short squeeze phenomenon to your advantage?

Ready to step into a world where market chaos transforms into well-calculated, strategic wins?

Your Blueprint to Mastering Short Squeezes is One Click Away.



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Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”