How Does a "Short Squeeze" Affect Margin Traders? ⎊ Path

How Does a “Short Squeeze” Affect Margin Traders?

A Short Squeeze occurs when the price of an asset rapidly increases, forcing short sellers (who bet on a price decrease) to buy back the asset to cover their positions and limit losses. For margin traders who are short, this rapid price rise can quickly lead to their account equity falling below the maintenance margin, triggering forced liquidation and exacerbating the price increase.

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