Well, you either don’t freak out, or your freak out and freak in again. History has proven that the former is much easier than the latter.
Bottoms occur when the last people panic sell. People tend to extrapolate trends poorly.
Bottoms occur when the last people panic sell. People tend to extrapolate trends poorly.
Who do you think shorts are buying from? Panic sellers.
But anyway, in equities, which is what most people invest in, the longs greatly outnumber the shorts. So short covering has a much smaller impact than a reduction in panic selling.
Shorts usually cover once the rebound starts, not when things are free-falling (their trailing stops get triggered, etc)
Mar'20, 2008, etc - these did not happen because guys were getting margined. These happened because because were panic selling huge amounts of length.