- Market makers manipulate charts through tactics like fake pumps to grab liquidity.
- These manipulative moves are designed to confuse traders and profit off their emotional reactions.
- Traders are advised to exercise caution and not to chase the peak or follow irrational market behaviors.
In the world of cryptocurrency trading, market makers have a notorious reputation for manipulation, particularly through tactics known as ‘fake pumps.’ These are designed to confuse traders, turning them into easy prey for profit-making schemes.
Imagine you’ve shorted Bitcoin (BTC) at $30,000, expecting a decline. Suddenly, BTC falls to $25,000, and it looks like you’re in the money. However, this could very well be a set-up. BTC may rebound to $26,800, making you think you should close your short position. Just as you do, market makers may initiate a fake pump, driving the price back up to $30,000 or higher. Trapped, you may now see BTC crash down even further, possibly to $20,000, eating up your profits and then some.
Market makers aren’t in the business of giving away money. They thrive in the chaos of volatile markets, manipulating emotional reactions of fear and greed for their advantage. These manipulations usually happen in the deepest parts of a bear market, especially when volatility and volume are low. The goal is to trick traders into believing a certain trend is developing, only to reverse it suddenly, capturing the liquidity from those who fell for the trap.
Given these dangers, traders should be extremely cautious. Impulsive decisions, often fueled by irrational behaviors like FOMO (Fear of Missing Out), can cost you dearly. Always be aware of your emotional state and make sure you are not chasing market peaks or lows based on market manipulations.
When it comes to market manipulation, it’s crucial to remain patient and not rush into trades. Monitoring market signals and the entry of rational, seasoned traders can offer better indications of a safe trading environment. Remember, those who rush in late often suffer the most.
Summary:
Market makers often use tactics like fake pumps to manipulate traders and grab liquidity. By understanding these strategies and maintaining a disciplined approach to trading, you can protect yourself from falling into such traps.
Source : https://twitter.com/DrProfitCrypto/status/1704005884467200146
disclaimer read moreCrypto News Land, also abbreviated as "CNL", is an independent media entity - we are not affiliated with any company in the blockchain and cryptocurrency industry. We aim to provide fresh and relevant content that will help build up the crypto space since we believe in its potential to impact the world for the better. All of our news sources are credible and accurate as we know it, although we do not make any warranty as to the validity of their statements as well as their motive behind it. While we make sure to double-check the veracity of information from our sources, we do not make any assurances as to the timeliness and completeness of any information in our website as provided by our sources. Moreover, we disclaim any information on our website as investment or financial advice. We encourage all visitors to do your own research and consult with an expert in the relevant subject before making any investment or trading decision.
