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Risk & Position Management
Stop Loss
Definition
An order that automatically closes a position once a defined adverse price is reached. For a short, a buy-stop above the entry price caps the loss. Cascading stop-losses contribute to squeeze severity.
Related Terms
Short Squeeze
A rapid increase in a stock's price caused by short sellers rushing to cover their positions. When many shorts try to buy shares simultaneously, it can drive the price up dramatically, forcing more shorts to cover.
Position Sizing
Determining how much capital to allocate to a single position based on conviction, volatility, and account risk tolerance. Conservative short sellers cap positions at 1-3% of portfolio NAV.
See short selling in action
Explore real-time ASIC short position data for ASX stocks.