I would just like to know if its possible to create cold fusion by
squeezing two combustible atoms together with extremely powerful
magnets. Its an idea I had, but everywhere I go, nobody really
combines two atoms using magnets, although there have been some very
creative ways to magnetically produce electricity.

Hello  aesthene

   Actually they do that. 

There to basic ways - intertial fusion and tokamaks.
Tokamaks are basically 'magnetic bottles' and here is a picture of one:
http://www.pppl.gov/projects/pages/tftr_1989_pic.html

 So - it is a neat idea; Not new but neat.

 As you can imagine - even though it all started with a  simple
idea, when Gamov was wondering about suns source of energy:
http://pwg.gsfc.nasa.gov/stargaze/Sun7enrg.htm

 it is a bit more complex now. 
 Most electricity today is made using magnets and electromagnets,
 but a different principle, called induction, is used.

In fusion, two postive nuclei have to collide with energy high
enough to overcome their repulsion. Tokomak is one way to keep
them from fying away and hitting walls. Another way is to use
the accelerators (atom-smashers) and to 'cross the beams' - and that
is also using magnets. To read more about this technology, you may want to
look here:
http://www.jet.efda.org/pages/content/fusion1.html

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tokamak
Gamov
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hedgie