I just saw another brutal price movement in the market, and it reminded me of something many traders still don’t fully understand: the difference between a short squeeze and a long squeeze.

Look, when you see those green or red candles exploding without an apparent reason, there’s usually a cause behind it. Too many people betting in the same direction.

A short squeeze occurs when almost everyone is short expecting the price to go down, but suddenly it rises. Those in short positions panic and start closing their positions. That means they’re buying to exit, which pushes the price even higher. It’s like a domino effect of forced buying. I’ve seen moves of 20-30% in minutes because of this.

Now, a long squeeze is exactly the opposite and is where many get burned. Too many traders are long expecting gains, but suddenly the price drops. The panic forces them to sell their positions to limit losses, adding more selling pressure. The price collapses even faster. It’s brutal because late entrants suffer the most.

What’s interesting is that both squeezes have signals. First, watch the open interest. If it’s very high in one direction and funding rates are skewed, there’s accumulated pressure. Second, when you see sudden volume in the opposite direction of the market’s trend, something is happening. Third, if the price breaks support or resistance levels violently, there’s probably a squeeze in progress.

My advice after seeing so many movements: don’t chase those huge candles. Late entries into a squeeze are the ones losing money. What works is observing how pressure builds up in the market, waiting for the move to complete, and then trading when things calm down. That’s how you make real money in these events.

Gate has some pretty useful tools to monitor this if you want to see the data in real time.