How price manipulation happens
Jul 24, 2017 · 1 min read
The goal of price manipulation is to shake out weak holders & buy at more favorable price. Here’s the sequence of actions that manipulators employ for that:
- The price shows sell resistance at level P1 (nobody sells lower).
- The price bounces up from P1 once again, and goes to P2 (P2 > P1).
- The same manipulator places a small buy order at P2- (P2- < P2).
- The manipulator places a large sell order at P2+ (P2+ > P2; P2+ = P2 * 1.01 — small difference).
- The weak holder sees the large sell order, believes the price will go down further, sells into manipulator’s buy order at P2-.
- The manipulator removes the large sell order, allowing the price to shoot upwards (like “taking a lid off the boiling kettle”).
“Better price, my friend!” — says the manipulator to himself.
