77% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that stocks can only be traded using a live spread betting or CFD trading account, whereas all other markets can be traded on using our risk-free demo account. Sign up for an account now to put your knowledge into action. Two popular indicators used to identify a short squeeze are the relative strength index (RSI) and stochastic oscillator, both of which are available on our online trading platform, Next Generation. Short squeeze indicators focus on finding oversold and overbought stocks, as traders will expect their price to rise. Traders often decide to use technical indicators to help them with the screening process. When short positions have grown above the short interest of 25%, especially if this happened rapidly, the likelihood of a short squeeze increases. Small cap stocks with a market capitalisation of over $300m and a price over $5 is also preferable, so that they are not considered penny stocks. This means that the short interest ratio is likely to be higher. This usually focuses on two aspects: a short interest of around 20% and over, and an average daily share volume of over 100,000. Searching for stocks that have potential for a short squeeze involves a screening process.
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