MARKET MAKER MANIPULATION

20 Jan 2022

Hello everyone!
Today I want to discuss with you a very interesting topic - the traps of market makers.
Let's get started.

Traps…
How often did you encounter this - you opened a position, and why did the price go sharply against you, knocking out your stop loss, and as soon as your position was closed with a loss, the price turned around again and went where you expected?
You analyzed your trades and did not understand what you did wrong.
Actually, it's not your fault. You just fell into the trap of a market maker.
These traps are created by large players in order to collect the stops of small market participants, thereby creating liquidity for opening or closing their large positions.

What do traps look like?
As a rule, traps are false level breakouts.
It is in these places that small players place their stop orders and this will be the main goal of a large player.

The first trap pattern is the classic Double Top pattern.
Everyone knows from books that the second peak should be slightly lower than the first. So the market tells us that the price no longer has the strength to make new highs and it's time to fall.
In fact, above the first peak, most traders place their stop losses, and large players push the price to them in order to activate orders and gain liquidity, after which the market reverses.

The second trap situation is the trend.
The trend is our friend! Everyone remembers and knows this.
In addition, everyone remembers that the trend changes when the price, in a bear market, renews the previous high.
After the new high, we believe that the trend has changed, but the price suddenly falls even lower and the downtrend resumes again, what happened?
The big player knows that traders put their stop losses above the last high and that is why the price pushes higher, so liquidity gathers, after which the bear market continues.

How to trade?
We cannot find out the thoughts and desires of major players.
The average trader should analyze the chart and try to act in the direction the market maker is pushing the price.
Pay attention to false breakouts - these are strong signals.
Seeing that the price has updated the maximum, and then turned around sharply, go short, so you will trade in the same direction with a major player.
Also, remember that traps are usually characterized by candles with long tails.
A long shadow will be a false breakout.

Conclusions
Trading traps is very difficult and at the beginning of the path you will fail.
Study the market, try to understand how a big player thinks.
When you learn, this strategy will bring you big profits.
Good luck!

Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩