Okay, let’s break this down in a realistic and professional way. Market Makers or the big market movers have enormous liquidity and the ability to influence prices, and they think in a completely different way than the average trader. The basic idea is that they exploit the same human behavior that drives small traders to emotional decisions.
Here are the main methods they use:
---
1️⃣ Move the price to create a "buy or sell trap"
Sometimes the market maker moves the price above an important resistance level or below an important support level for a short time.
Goal: Make traders believe there is a strong trend, so they enter positions, then the price reverses.
Example: A fake breakout above resistance to attract purchases, then suddenly reversing the price to sell at the highest price.
---
2️⃣ Targeting Stop-Loss Levels (Stop Hunting)
Most traders place stop-loss orders at clear areas like support or resistance.
Market makers know these levels and move the price to hunt these orders, pressuring the market to serve their interests.
Outcome: Small traders exit their positions at a loss, while the market maker profits from the liquidity added by these traders.
---
3️⃣ Playing with Emotions: Fear and Greed
Fear: A rapid price drop pushes traders to sell in fear of larger losses.
Greed: A sudden price increase drives them to buy at the highest price, believing they will benefit more.
The market maker uses short but powerful movements to deliberately provoke these emotions.
---
4️⃣ Short-term Direction Control
You often see "high volatility" without a clear trend. This confuses the average trader and leads them to sell or buy at the wrong time.
Market makers take advantage of this to gather liquidity or to liquidate their large positions without significant loss.
---
5️⃣ Using large liquidity to influence the price
The market maker has the ability to execute large orders, allowing them to temporarily change the price to make traders think the new trend is strong.
While in reality, this is a short-term movement to accumulate or liquidate positions.
---
💡 Advice for Smart Investors:
Do not trade based on every short price movement.
Learn the real support and resistance levels, not the fake ones.
Pay attention to candlesticks and technical analysis on multiple time frames to reduce the impact of traps.
Use strict risk management to avoid falling into market maker strategies.
---