What's going on moon gang, i want to make a video about short squeezes and price targets, and, if you want the tldr version of this, basically, i think having a price target in the event of a short squeeze is a really silly way to maximize your profit. I'll be explaining the psychology side of things, the mathematical side of things and, at the end i'll be letting you know what i'm personally going to be doing with my own position. If i don't have a price target in mind, so with all that being said, let's hop right into it: numero uno, traitor, psychology or, let's even just talk about mentality in a general sense. If you personally believe that a certain value has to be hit, which is always a dangerous thought, because nothing ever has to happen in the market, think about it, this way, what if you have a particular number in mind and we trade all the way up to It and we're a cent below and then all of a sudden it comes back down and the squeeze is over and you missed it all.

Even though you were dedicating a lot of your trading career to this exact moment, you might miss out on all of it. If you're so steady and fast in your position for a very specific number, like imagine that event that you come right up, you miss it by cent and it comes back down and you never got your attendees on the flip side. What, if you have a number? We come up to it, it's nothing and we rip even more and more and more, even though you got out of your full position right there, because you have that price target in mind what this is of. Having a very specific number, i think it's setting up a scenario where you're not really putting the odds on your side for collecting a meat of the move.

That's how i think of this whole thing. If you want to try to top tick, if you want to try to bottom tick, that's great and we're all trying to do it, but the chances of it happening are infinitesimally small. So i think the best idea is like okay collect the meat of the move, and you don't want to be in the scenario where you miss out on all of your profits because it might have been a sent away. And you also don't want to miss out on a gigantic move, because what if your price target was way too low, so number one just from a psychology traitor, mentality, part just having a pure number in your mind to me does not make much sense number two.

Let's talk about math so when a price moves, it's always supply and demand, and the price of an individual equity is the equilibrium. That's the crossover point between supply and demand, and it could also be represented in another form of terminology of buying aggression and selling aggression. So when we're looking at the event of a short squeeze you're, looking at a crazy amount of buying aggression, though really the demand is greatly outweighing the supply and as that gets slid up, the price also gets slid up. Well, if we're talking about a short squeeze, let's look at the three main forms of buying.

Yes, there's shorts, covering there is a rough mathematical way. You can say: okay, if there's all these shares on loan and roughly this percentage are actually short and, if they're all covering well okay, it could roughly represent this amount of buying pressure, i'm with you there so far. There is some mathematical models that can do that. Another one that you can do rough math for is a gamma squeeze okay, if you're looking at the option chain and you're like okay, if this goes out of the money to in the money and we're expecting that this percentage is unhedged and then they're gon na Have to hedge for that yeah! There's rough! But now you just have two different rough mathematical equations that it's getting a little bit more inaccurate and the third one, which i personally believe is why mathematically we should never have.

A price target is fomo buying. What mathematical model is out there that possibly explains how many people are going to fomo into a position. So all of a sudden you have fomo buying, which no mathematical model is ever going to really do a good job of accurately. Describing and then you have two different things: a short squeeze and a gamma squeeze and all three of these can play into each other.

But those latter, two they're kind of vague and you could get a little accurate. But it's gon na still mainly be inaccurate and then, when you put all three together because all three represent buying pressure, there's no way that there's gon na ever be a model that accurately describes those three. So now, from a psychology standpoint, i think it's really setting yourself up to go until, from a mathematical standpoint, we're never going to say okay, this is how much buying pressure there is. Thus it could go to value x and i just think because of those two key reasons, it is so absurdly silly to have a price target.

There are some targets i see floating around on social media that are way way too low and then there's some that i think are way way too high. So with that being said, if i'm looking at this, not through the lens of having a price target of like i want it to go to value x, here's how i'm personally handling it now remember, i'm not a financial advisor do what's best for you, nothing! I ever say is a buy signal. Nothing, i say, is a sell signal. Nothing.

I say it's a whole signal. You got to do what's best for you, i'm just sharing my own opinions on this and how i'm handling it. For me, it's as basic as riding the trend, not only the trend of the stock price, but i'm following the trend of the shorts. I'm pretty much in this to see if the shorts are going to cover and i think they will it's just really a question of when and the ferocity at which they all cover will it all happen around the same time i'm paying attention to the shorts.

So the trends of the shorts either increasing or decreasing, and then obviously the trend of the stock. I am not steadfast enough. It has to hit this value. No i'm going to let the charts tell me what's going on and i think when you think of it that way, it's the closest way, you're going to come to being maximizing your profits, because you're looking for the meat of the move.

Once again, these are my own opinions and it really that's exactly why i don't think anyone should be functioning on it has to go to this particular price target, especially when you're looking at it through a crazy black swan event of a short squeeze. Obviously these are my own opinions. I would love to get your thoughts in a comment below. If you enjoyed this video, it would be awesome if you could hit the like and if you haven't already don't forget, to join up with the moon gang by hitting the subscribe button.

I appreciate all of you catch in the next video.