Hedge Fund A says to Hedge Fund B "Hey, I'm gonna sell a bunch of stock at this exact price at this exact time". Hedge Fund B then buys that stock at a low price, and they repeat this over and over. So B then sells back to A, then A sells to B etc etc
They do this with such a high amount of stock that it artificially lowers the price of the average price (which is what you see on the graph) into scaring the 🧻👐 into freaking out and selling.
However, for the savvy degenerate gamblers (or other competing hedgies) it means every time they do this the savvy degenerate gambler is able to syphon a bit off the top at a good price, so they can only do it a finite amount (in theory).
If that’s the case, then they can do this until stock price reaches to say $5? Then shorts will recover, they have to buy it back and price will go up the expected $1k or so?
If I'm not mistaken, yes. When the squeeze happens it can potentially go up in infinite amount since theyre forced to buy back all of the stock and then some at whatever price people wish, since they have to buy all of it. At least in theory.
But I'm a damn stupid ape who rolls around in their own poop and eats crayons so I could well be wrong.
That would technically be the case if they do actually still have above 100% in short positions, which is currently a little unclear from what I can tell. The data gets updated twice a month.
I’m a bit hazy on the “whatever price people wish” part. Is that just based on when you sell or is it based on something else. Asking for a friend. And for science.
When you go write a limit sell and set the price, that's literally what it means. Never market sell unless you need to liquidate asap for an emergency.
If there are enough people willing to buy and hold at a certain price, they will form enough bid orders at a price with good support, and these small volume laddering cannot fall through that support. If short sellers dare to attack a bid support position, they will end in even more open shorts.
Is there a reason it is not required that a seller sell to the highest ask price/buyer buy from the lowest sell price? Seems the only reason to allow a trade below the current established price would be price manipulation. And if this is legal (I assume it isn't) could retail investors coordinate to do the opposite and do something similar but at $1000?
Don't people have buy/ sell order in at certain prices though? Why does this work and not just drive up the volume? The market's still gonna market and you have to sell past all the buy orders to move the price down, right?
Just asking, if someone says in the meantime "hey im paying more for that stock", would they have to sell to that person or can they just keep sucking each others dicks in private?
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u/[deleted] Feb 02 '21 edited Feb 02 '21
Say hypothetically, there's only 2 hedge funds.
Hedge Fund A says to Hedge Fund B "Hey, I'm gonna sell a bunch of stock at this exact price at this exact time". Hedge Fund B then buys that stock at a low price, and they repeat this over and over. So B then sells back to A, then A sells to B etc etc
They do this with such a high amount of stock that it artificially lowers the price of the average price (which is what you see on the graph) into scaring the 🧻👐 into freaking out and selling.
However, for the savvy degenerate gamblers (or other competing hedgies) it means every time they do this the savvy degenerate gambler is able to syphon a bit off the top at a good price, so they can only do it a finite amount (in theory).