What is SqueezeMetrics?
What is SqueezeMetrics? When visiting the SqueezeMetrics website for the first time, the purpose of the website can be confusing. There does not seem to be any clear indication on the landing page as to the purpose of Squeezemetrics.
According to Tradewell and Seeking Alpha, SqueezeMetrics provides unconventional, or alternative tools and data that can prove to be extremely useful for traders.
But, in order to determine if Squeeze Metrics is worthwhile for you, let's break down some of the main benefits as well as the cost.
Since SqueezeMetrics is advertised as an alternative data source, it is important to go through all of the data that can be provided, in order to determine whether or not it is worthwhile for you.
This information SqueezeMetrics claims to offer on more than 4,500 different securities on the Nasdaq, and NYSE.
1. SqueezeMetrics Dark Pool Data (DIX)
Before we can understand what the significance of the DIX is, we first need to understand what Dark Pool data is. Essentially, some claim that the public does not have access to almost 40% of daily trade volume.
These trades are often placed by banks and hedge funds which trade large sums of money. The reason that these trades are often not available to others is due to the fact that they are done through private exchanges.
There are a few reasons why this information can be valuable to a trader. First, it can be valuable simply because of the large amount of trades that it makes up. If you know what 60% more of the market is doing than some other traders then you have a very large advantage.
However, there is another reason why you might want to have access to dark pool data. Some have claimed that banks and other market makers use dark pool data in order to manipulate the markets.
You can read more about the best free dark pool data here.
If this is true, then it is important to have access to historic dark pool data in order to analyze trends which can be applied in current markets, and which can indicate when a trade opportunity might approach, or when it may be time to exit an existing trade.
The information can be portrayed in a variety of different formats, one of which is an interactive graph as can be seen on the two year graph of the S&P 500, where the green line is the security and the blue line is the Dark pool data.
2. SqueezeMetrics Gamma Exposure Data (GEX)
Gamma exposure is a second order derivative. You can use the difference between the price of an option or collection of bids, and the price of the underlying security to determine the price sensitivity of the derivatives.
Essentially, it is an indication of the change in delta, or the potential volatility of a stock.
You can read more about what is gamma exposure here.
Volatility is an important measure when determining risk for traders. A successful trader is one that can successfully manage risk, and the information can be used to determine the possibility of the security moving in a direction that will not benefit the trader, and how much it is likely to move in that direction at any given moment.
You can read about a long volatility strategy here.
The calculations of gamma are complex and can often only be done through the use of financial software such as SqueezeMetrics. It can not simply be calculated on an excel spreadsheet. For this reason, the software that offers it can prove to be extremely valuable.
An example of a GEX chart provided by SqueezeMetrics can be seen below, where the S&P 500 security is in green, and the GEX is in purple/orange.
Cost of SqueezeMetrics
Squeezemetrics cost $720 per month at the time of writing this article in July 2022. They are very clear on their website that there are no discounts or coupons available, even if you pay for a full year in advance. They will not accept soft-dollar exchanges or fill in any compliance certificates or forms.
They claim that the cost of their product reflects the value of the information and the maintenance required to continually improve the offering.
That may be the case. However, as with most tools that a trader might consider using, it is almost impossible to tell if something will be useful to you, and assist in increasing your profit after only a few weeks.
In most cases, it is valuable to get comparative data over the course of several months so that you can ascertain if the cost is worth it. Every trader is different so there is no way that you will be able to guarantee success based on the results of others.
Additionally, it is important to consider the volume that most traders will use in their trades.
Risk management is important, and for that reason it is a general rule of thumb that a trader not risk more than 1% of their entire portfolio on any single trade.
If this number is taken into consideration, and the purchase of SqueezeMetrics is seen as a risk that is taken in an attempt to make profit, then the cost should not be more than 1% of a trader's portfolio.
Considering this, only traders with a portfolio of more than $72,000 could realistically look at purchasing even a single month's subscription. This would eliminate most traders within the first few years of their career as well as many experienced retail traders.
Registering for SqueezeMetrics
SqueezeMetrics is relatively simple to sign up for provided that you have the funds available and attempt to sign up at the right time. Unlike most other subscription based services, they are not always open to the public, and sometimes do not accept any new subscribers for extensive periods of time. The reason for this is unclear.
It can be highly inconvenient if you are trying to learn how to use dark pool data and gamma exposure as these things take time. As there is no indication given as to when they will start accepting new subscribers again, it may be worthwhile looking at other options in the interim.
Is SqueezeMetrics for You
The reality is that the information that is provided by SqueezeMetrics can prove to be very useful to any trader who knows how to read and interpret the information.
Any additional information that you can have before opening a position is always useful. However, the cost of SqueezeMetrics means that it is not worthwhile for most retail traders.
Dark pool data as well as Gamma exposure are both very important figures which can illustrate, almost in real time, the changes that will follow in the market.
However, there are other options that will allow you to play around with dark pool data for free as well as gamma exposure that do not cost so much.
There are even some online options which, although they may not work quite as smoothly or may not portray the information as neatly as a paid version, would give you much of the same information as SqueezeMetrics.
Perhaps it would be best to test whether or not these sets of data will be useful to you through the use of a free option first, such as StockGrid, or try to find a cheaper option.
Additionally, the fact that they do not always accept new customers can be highly inconvenient. If they are not accepting new subscribers when you attempt to sign up, it might be best to look at another option as there is no indication given as to when this will change.
And, due to the learning curve that a lot of these tools have, it may be better to stay with the alternative option.
Whether or not you think that SqueezeMetrics is for you, it is important to consider the risk of every decision made when trading, and that includes the purchase of certain trading tools.
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