Cryptocurrency market manipulation. Part 4 — Swing.
Those who have at least once tried to trade on the stock exchange within a day, i.e. who was directly engaged in speculation, he knows how the incomprehensible and inexplicable fluctuations of the market in both directions are unpleasant, how they morally wear out you and force you to make wrong impulsive decisions. As we already know, these movements don’t happen on their own, this is another method of manipulating the crowd :), based on psychological exhaustion:
Swing. Sharp, unpredictable, inexplicable price movements in both directions, sometimes with a growing amplitude.
One of the purposes of this method of manipulation is to drive out speculators from the asset, force them to sell and go to other assets. When the market moves incomprehensible, as described above, many players over time don’t withstand psychological stress and just close all their positions, which was required by the monster. At the same time, there are certainly those who try to speculate in such a market, i.e. tries to buy on the next fall or sell on the next rise. But, don’t forget that the manipulator is also not a thoughtless machine and acts with the reaction of the crowd. If he sees, for example, that the asset is crowded by people, who think that it is the”bottom”, he can happily give them a “second bottom”, lowering the price even lower, and for fearless guys “even the third and fourth bottoms”. In the end, the majority will come out of the asset, and the monster that has collected the assets will move the price up and begin again at a new level.
The second way of this manipulation is the same progressive movements of the price up and down, but with a greatly increasing amplitude of motion. We already wrote, in part 2 of the series, how with the help of one “puncture” it was possible to “rob” a lot of traders engaged in margin trading, who placed stop-loss (hereinafter simply — stops). But if in that situation the execution of orders stop-loss occurred as a result of one major manipulation, then in the “swing” method, this is done by a number of transactions over a long period.
In the stops there is nothing bad, this is the right tool for managing the risk of an open position, but if the manipulator interferes with the matter, then the stops become the enemy of the crowd. How to set a stop decides each for himself, someone is using methods of technical analysis of the market, levels of support and resistance, someone simply puts stops just below or above the price of buying/selling, someone operates with intuition, there is no one-size-fits-all approach. But for the swing method, it does not matter, the monster simply shakes the market from side to side more and more, grabbing more and more stop-loss. In addition, as already mentioned above, the manipulator often knows where the majority of stops are, since most newly made traders-speculators actually use technical analysis methods and are oriented to resistance/support levels when setting stops. The aim of the manipulator is to beat these stops constantly by lowering/raising the price below/above the trend lines, etc. The game continues while most of the crowd are still in the asset. After that, the price of the asset is again shifted to a new level and everything repeats.
If a significant part of the people eventually removed their stop orders and the monster could not knock them out of the asset, then he begins to move the price against this crowd. For example, if he sees that many speculators have taken a long position, then the price for this asset is shifted to a lower level and there the swing will continue. This will continue until the assets of the majority of players are taken away.
How does he see in what position is the crowd? Well, firstly, it is insider information from exchanges. The market is not regulated yet and in our view, large players may well have access to the specified information. Secondly, they are very, very big players and they can receive information indirectly. If there are not enough assets in their portfolios, it means that the speculators and the price should be moved downwards, if there are a lot of assets in their portfolios, then the price should be moved upwards.
If you have any questions — don’t hesitate to write us at https://t.me/fidcom or info@fidcom.net
Join our ICO https://fidcom.net
