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[Must-see for contract trading] Big player psychology: upward and downward pins
Big player psychology: upward and downward pins
In the financial market, big players are like invisible chess players, controlling every piece on the board. Retail investors often mistakenly believe they are the players, but in reality, they are just pawns, pushed towards the abyss by unseen hands. One of the most cunning tactics is 'upward and downward pins'. This is not just simple price fluctuation but a psychological trap carefully designed by big players, exploiting the weaknesses of human nature—fear and greed—to harvest retail investors. What are upward and downward pins? How do they manipulate the human mind? This article will analyze this technique from a psychological perspective, helping readers understand the mentality of big players and avoid the hidden reefs of the market.
The appearance of upward and downward pins: 'pin shadows' on the candlestick
Let's first break down this term. In stock or cryptocurrency candlestick charts, 'upward and downward pins' are characterized by sharp price increases (upward pin) or sharp declines (downward pin) in a short time, forming a long shadow, as if a pin has pierced the candle. For example, a stock oscillates near a support level and should rise steadily, but suddenly dips to a previous low, hitting retail investors' stop-loss levels, and then quickly rebounds; conversely, at a resistance level, it pretends to break through a new high, enticing others to chase, then immediately falls back. These fluctuations often occur during periods of low liquidity, such as before or after market open or close, lasting only a few minutes to a few hours.
From a technical perspective, big players create illusions through large orders or algorithmic trading. They do not operate randomly but accurately 'stab' at the retail investors' pain points based on the depth of the order book. Data shows that in the cryptocurrency market, this pinning phenomenon occurs frequently: according to Binance data, over 30% of extreme fluctuations in 2024 Bitcoin futures stem from such manipulation. Big players are not 'buying and selling for themselves' but are using the liquidation mechanism of leveraged contracts. The stop-loss orders set by leveraged traders become the 'bait' for big players—one pin down, a wave of liquidations, liquidity floods in, and big players buy low and sell high, making profits easily.
But this is just the tip of the iceberg. The real killer move is psychology. The big players understand human nature; they are not trading prices but trading emotions.
Fear pin: downward pin and panic selling
In psychology, fear is a human instinctive response dominated by the amygdala, much faster than the rational brain's cortical processing. The big players exploit this 'fast track' to launch downward pin attacks. Imagine: the stock you hold has a floating profit of 20%, just about to break even, but suddenly the price crashes through the support like a free fall. Your heart races, and images of 'crash' and 'zero' flash through your mind. Behavioral finance pioneer Daniel Kahneman's 'prospect theory' explains this: the pain of loss is twice that of gain. Retail investors, in fear, would rather take a small loss than gamble on greater uncertainty.
How do big players amplify this fear? First is the 'anchoring effect': they deliberately let prices 'anchor' near the retail psychological price level and test it repeatedly. For example, a certain cryptocurrency oscillates around $10,000, and the big player drives it down to $9,500, hitting the stop-loss line for many long positions. The order book shows stop-loss orders flooding out, and the price crashes. But the big players have already set buy orders around $9,000, waiting for the panic selling to end, and the price rebounds to $10,200. They not only eat up cheap chips but also profit doubly through short contracts.
A real case occurred in the Ethereum market in 2023. In May that year, ETH consolidated in the $1,800 range, and big players launched downward pins for three consecutive days, hitting a low of $1,650. Retail investor forums were filled with cries: 'Big players are washing out, run!' As a result, ETH rebounded to $2,200 a few days later, with big players laughing triumphantly as they sold. Psychological research shows that this 'loss aversion' causes 80% of retail investors to cut losses during pinning, while big players only need to incur 1% in costs to reap tenfold returns.
Even more insidious is the 'bandwagon effect'. In the era of social media, big players amplify panic through hired influencers: a tweet about an 'imminent crash' can trigger a chain reaction. Milgram's obedience experiments prove that people are easily influenced by groups. In the market, this translates into the 'herd effect'—seeing others sell, one hurriedly follows suit. Big players reap the benefits, with the mentality: 'Fear is like a virus; one pin can infect the entire market.'
Greedy pin: upward pin and chasing up and down
If the downward pin is 'kill', then the upward pin is 'entice'. Greed comes from dopamine secretion; when the price breaks through resistance, retail investors' reward centers are activated, fantasizing about 'getting rich overnight'. Big players cleverly utilize 'confirmation bias': people tend to believe information that supports their expectations. When the upward pin occurs, the price skyrockets like a rocket, and the candlestick shows a long upper shadow, pretending to break through a new high. Retail investors rush in, and the FOMO (Fear Of Missing Out) sentiment rises.
Big players calculate precisely: they know that leveraged longs will add positions to chase higher, while shorts will panic and close out. Upward pins often come with false volume—big players use small orders to push prices up, creating an illusion of amplified transactions. When prices reach artificially high levels, sell orders pour in, and pin shadows fall. Psychologically, this is called 'overconfidence bias': retail investors underestimate risks and overestimate their own judgments. Kahneman's research shows that investors' confidence swells by 30% in bull markets, making them prone to chasing highs.
Taking Dogecoin in the crypto market as an example, in May 2021, DOGE spiked from $0.5 to $0.73, retail investors celebrated the 'moon trip'. The big players sold at the peak, and the price fell back to $0.4, liquidating countless leveraged positions. The mentality of the big players: 'Greed is like a magnet, a pin attracts the golden fleece.' They not only profit from the price difference but also collect fees and liquidation funds. Data shows that this type of upward pin has an average return rate of 5-15% for big players.
The combination of upward and downward pins is even more lethal: first, a downward pin washes out, clearing the longs; then an upward pin entices the bulls, double killing after the followers enter. Big players act like psychologists, precisely diagnosing the 'greed and fear syndrome' of retail investors.
Big player mentality: cold-blooded game theory
Big players are not inherently evil; they are rational economic agents who follow the Nash equilibrium of game theory. In a zero-sum market, your loss is their gain. John Maynard Keynes' theory of 'animal spirits' posits that the market is driven by emotions, and big players are the directors of those emotions. They analyze order flows through big data to predict retail behavior: selling more when there’s fear and buying more when there’s greed.
But big players also have psychological weaknesses: excessive confidence can lead to 'the emperor's new clothes'—false breakthroughs can backfire with real funds. The collapse of FTX in 2022 was a case of big players reaping what they sowed. But for most, they are winners because of the retail investors' 'status quo bias'—reluctance to change habits, endlessly trapped in a cycle.
How to break the deadlock: cultivating psychological resilience
In the face of upward and downward pins, technical stop-losses are not sufficient to protect oneself; psychological preparation is key. First, notice your emotions: take a deep breath before trading and record 'why you buy/sell'. Behavioral economics suggests using a 'pre-margin' strategy—setting stop-losses based on trends rather than panic.
Secondly, think inversely: when there’s pinning, ask yourself, 'If I were the big player, what would I do?' This stems from 'big player mindset training', putting yourself in the opponent's shoes to predict the next move. Lastly, diversify risk: do not go all-in with leverage; hold no more than 20% of total capital in positions. Finally, learn 'delayed gratification': ignore short-term pin shadows and focus on long-term trends. Studies show that investors who adhere to these principles achieve annualized returns 15% higher.
Social media is a double-edged sword: block out the noise, join rational communities. Remember, the market is like a casino, and the dealer is the house. Only with psychological independence can you avoid being pricked.
Conclusion: From pawn to player
Upward and downward pins are the pinnacle of big player psychology, piercing not just prices but also hearts. Fear and greed, like the two ends of a pin, string together the fate of retail investors. But knowledge is the antidote: understanding the tricks of big players allows you to look at the winds calmly. In the world of finance, the game has no end. May every reader, from now on, use reason as a shield, avoid hidden pins, and welcome the dawn.
Ways to profit from trading in the crypto market:
In the ever-changing crypto market, to stand firm for the long term and achieve profitability, mastering core survival rules and trading strategies is crucial. The following experiences have been earned by countless investors with real money, hoping to illuminate your path forward.
Core survival rules:
Capital investment principles
Always invest only what you can afford to lose in trading. It’s like marching into battle; supplies must be adequate and not all in at once. Only by using spare money that does not affect daily life can you remain calm in the face of market fluctuations, avoiding a situation where one loss leads to a dead end.
Capture trading opportunities
When trading, you should be like a cheetah, patiently waiting for the best opportunity. The cheetah lies in wait for a long time before hunting, observing the prey's movements, and once the timing is right, it strikes with lightning speed. The same goes for the crypto market; do not blindly follow the crowd, but wait for clear trend signals from the market before entering decisively.
The way of leveraging
5x leverage is considered the golden ratio. Leverage is a double-edged sword; if used well, it can amplify returns, but if misused, it can accelerate losses. 5x leverage can increase profits to some extent without letting risks spiral out of control, providing a relatively stable operational space for trading.
Capital protection concept
Protecting capital means preserving hope. Capital is the foundation of trading; once capital is significantly damaged, it becomes extremely difficult to turn things around. No matter how tempting the market may be, always remember the importance of protecting capital to avoid falling into an irretrievable situation due to greed.
Core trading strategy
High leverage precision sniping combined with strict stop-loss
Adopt a strategy of high leverage + precision sniping + strict stop-loss. High leverage can rapidly increase capital in a short period but also comes with high risk. Precision sniping requires investors to have keen market insight and accurate judgment, only choosing the most reliable trading opportunities. Strict stop-loss is key to controlling risk; when market trends do not align with expectations, decisive stop-loss is needed to prevent further losses.
Selection of trading varieties
Only trade BTC/ETH. These two cryptocurrencies have high liquidity and relatively fewer pinning phenomena, making them battlefields for large funds. For ordinary investors, choosing highly liquid varieties ensures smooth trading, reduces issues like slippage due to insufficient market depth, and increases the success rate of transactions.
Leverage multiple settings
Use 20x leverage. Taking 1000U as an example, with 20x leverage, a single 5% fluctuation can turn funds into 20,000U. But always remember to set stop-loss orders when opening positions; the liquidation line is your bottom line. High leverage can bring high returns, but the risk also increases geometrically. Setting stop-loss can ensure timely exit in unfavorable market conditions, avoiding total loss from liquidation.
Breakthrough chasing technique
Use the breakthrough chasing method. Wait for a significant horizontal breakout (over 4 hours); when the price breaks through previous highs or lows, immediately jump in to catch the momentum. This strategy utilizes market trend inertia; when a breakout occurs, the market often continues the original trend for a while, providing profit opportunities for investors. However, be aware that breakout trends may also have false breakouts, so it’s essential to combine other indicators for comprehensive judgment.
Core trading and position management
Essence of core trading
At the core of trading in the crypto market, only those who have been severely 'educated' by the market truly understand. The core of trading is position management; all trading actions must be conducted within appropriate position management. This is like building a skyscraper; position management is the foundation of the building, and only with a solid foundation can the building stand tall.
Profit and loss balance
Reasonable position management allows you to make big profits at the right time and small losses when things go wrong, ensuring stable capital growth. When market trends align with expectations, a larger position can magnify profits; when market trends are unfavorable, a smaller position can limit losses. This way of balancing gains and losses enables steady capital growth.
Emotional and rational game
People are always emotionally driven rather than rationally determined. No matter how much you emphasize the rationality of your decisions, in reality, they are always dominated by emotions. Your directional judgments often carry subjective biases, and all technical indicators will show strengths or weaknesses based on your judgments. Therefore, in trading, always be vigilant against emotional interference and try to rely on objective data and rules for decision-making.
Grateful for what the market provides
When we make money in the market, we should thank the market, not because we are strong, but because the market has given us a taste of sweetness. The market is unpredictable; it gives us opportunities for profit and can take them back at any time. We must maintain a sense of awe, cherish every opportunity for profit, and also be prepared to cope with losses.
Discipline leads to victory
Everything is a matter of chance and discipline that leads us to victory, and the key is position management. Surviving longer increases the chances of winning; trading in the crypto market is a probabilistic game, not a cash machine for a specific individual. The difference between speculation and gambling lies in discipline; only by strictly adhering to trading discipline can one survive in the market in the long run and ultimately achieve the goal of profitability.
Follow Old Chen, and you will definitely gain something; helping others is like helping oneself. I hope that no matter how the market changes, we can walk together, and ten years later we can still look at the crypto market with a smile.$BTC $ETH #比特币生态逆势上涨
