AMC turns from rain to a hurricane

Volatility is the name of the game [Click to view in browser](. Good afternoon, Making money in the stock market is hard. Keeping it is even harder. Adam Aaron, AMC (AMC) CEO, knows this all too well. So, it’s no surprise news hit the wire this morning that the company plans to sell 11 million shares and take advantage of the ridiculous stock prices. Shares immediately flipped like a pancake, going from rally to rout in the pre-market. It left traders and investors scratching their heads. Less juice to squeeze Meme stocks started with Gamestop (GME), one of the most heavily shorted names out there. Through a collective effort, retail investors banded together to buy up shares, creating one of the most epic short-squeezes ever. What’s a short squeeze? To bet against a stock, a trader borrows shares from their broker to sell on the open market. Once the stock drops, they buy the shares back, hand them to the broker, and profit from the difference. When stocks head higher, the trader’s losses grow. Eventually, the broker issues a margin call and forces the trader to close their position to stem the bleeding. The trader then buys the shares back to close the position, adding more buying pressure. In turn, this creates more margin calls, leading to a cascading effect known as a short-squeeze. This time is a bit different. Traders measure short interest as a percentage of total shares available for trading. Back in the beginning, GME was over 100% and AMC was well over 50%. Today, AMC is closer to 20%, still one of the highest, but not nearly as drastic. And with the company pushing more shares into the open market, it creates even more downward pressure on the stock. Should you meme? In an interesting twist of fate, the lockdowns put people at home just as markets were bottoming. With little to do, many folks who never traded before tossed a few hundred or a few thousand bucks at the market, catching one wild ride. It created this exuberance and hubris that fuels our current bubbles in everything from cryptocurrencies to heavily shorted equities But volatility is a two-way street. You can make a fortune. But you can lose one just as easily. Truth be told, the number of true winners turns out to be rather small in the long-run. Inevitably, part-time traders, those who catch up on stocks between meetings, will get hurt the most. Market shifts come fast and furious. If history tells us anything, we know that it will be when retail traders and investors least expect it and are the least prepared. Our hot take Be cautious. Markets are a marathon, not a sprint. If you like trading, give yourself a set of rules to work with. For investors, never feel bad about locking in profits. While this might be the hottest story of the day, plenty of other news moves the financial markets. That’s why we collected some great material from our network of publishers for you below. 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