In these days when the market is active, many new and inexperienced investors are entering with the hope of getting rich. The increasing interest, especially in social media, has attracted an important investor wind and continues to attract.
But is there enough money in the market for everyone? Yes, there is a lot of money in the market and it continues to increase, but where does this money come from?
The more capital (principal) you have in the market, the more you can actually earn. You can also think of it this way. If you earn a lot, there are others who lose a lot. Imagine that not everyone is investing the same amount and some are investing huge sums in the market. We call these people or institutions whales. They manipulate the market with huge sums in their possession and manipulate the investor, causing them to lose. Sometimes whales determine the direction of the market and in this case your job will be very difficult if you are not in the same direction as them.
How Whales Trap Investors
Imagine a scenario like this. You have a lot of capital in your hands and you want to earn a lot. However, you don’t have those with big capital as much as you. In this case, if you can hurt most of them, you can increase the amount you earn. It’s like the whales in these underwater documentaries going to the small fish swimming in groups and eating them by opening their huge mouth. So how should precautions be taken?
There is no clear answer to this. You cannot stop a large enough capital to steer the market alone. Instead, try to be with the Whale, not against it. Be in the same direction with him so that you don’t get upset. Let’s detail this a little bit.
Collect from the Bottom
A whale first buys an asset at a low price. For example, let’s call it the asset “X” and the price at which it buys is $ 3. Then it increases the price by making purchases and makes a sign to the investor, “Look, this asset is very good, its price is increasing, come on, too.” You also bought at $ 4. With the purchases of other investors and the purchases of the whale, the price reached the level of $ 5. The whale has increased its cost with these extra purchases. It was initially $ 3, but it also bought some from $ 4 and $ 5. So suppose the average cost of the whale is $ 4.
The whale is in the snow right now, but in order to get that profit in his pocket, he has to be able to sell his assets. However, we are not talking about a small amount here. Selling a joke is not easy. Because even if he wants to sell at $ 5, if there are not enough buyers, he cannot sell all of his items at that price. It will need to go as low as $ 3 to find enough buyers. In order for the whale to sell, there must be people who want to buy it at that price, and the amount these people want to buy must be greater than the amount that the whale can sell. In this case, the whale will not sell before enough investors arrive, and by raising the price, it will make that asset more attractive. Thus, he will increase the demand and sell what he has.
Liquidate the Investor!
The whale brought the asset’s price up to $ 6. However, it still could not find enough buyers. In this case it will raise even more. However, another problem arises here. You and the investors who bought the same period as you bought at the level of $ 4 and the current price is $ 6. Your position is in profit and now you tend to sell. In this case, as the whale increases the price of the asset, the number of those who are in profit and the profit rates will increase. This means that as the price increases, the selling pressure increases and the whale has to spend more magazines to raise the price.
Instead, the whale keeps the price within a certain band by placing strong buy and sell orders. In this way, the investor who is in profit thinks that the price will no longer rise. He sells what he has in hand, which he tends to sell. In other words, you sold what you have to “A” person at the level of 6 dollars and took your profit in your pocket. Person “A” will then cost $ 6 and will wait for the price to rise to sell. Thus, the whale reduced the selling pressure by liquidating what was in profit from the market. After keeping the price horizontal enough and liquidating the investor, it will raise it again. When the price of the asset reaches $ 9, it means that many investors have fallen into its trap. While investors are dreaming of getting rich, they are unaware that the whale is raising the price artificially. When the whale finds enough investors, it starts selling and reduces the price from $ 9 to $ 6. Top-down investors are losing heavily, but the bad scenario is not over yet. Previously, the price was going up as the whale was suppressed from below. Now there is no such power and the price will drop rapidly when other investors start selling as well.
When the price drops to the $ 4 level again, only those waiting at loss will remain. However, if the Whale is going to make its second visit, pull the price further down.