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Today's cryptocurrency market crash reminds me of a common term in stock trading - wash trading.
Wash trading, simply put, is when the big players (large funds) use various means to scare away those weak retail investors (small funds), allowing themselves to accumulate shares at lower prices in preparation for a subsequent rally. You can think of it as a psychological battle, where the big players use various tactics to make retail investors believe that stock prices are going to drop, prompting them to sell quickly, while the big players secretly buy in the background. Common methods of wash trading include depressing stock prices, creating false breakouts, and sideways fluctuations.
To cope with wash trading, stay calm: The core of wash trading is to create panic, leading you to act emotionally. Therefore, when facing stock price fluctuations, it is essential to remain calm and not be swayed by short-term ups and downs. Recognize the trend: Wash trading usually occurs during the middle of a price increase, aiming to clear out floating shares. If you can see the medium to long-term trend of the stock, you won't be misled by short-term wash trading. Set a stop loss: To avoid being hurt too deeply by wash trading, it is advisable to set a reasonable stop loss point. For example, if the stock price falls below a key support level, you can choose to temporarily exit and wait for the trend to clarify before re-entering.
Wash trading is a common tactic in the stock market but is equally applicable to the cryptocurrency investment market. As a retail investor, the most important thing is to stay calm, recognize the trend, and not be misled by short-term fluctuations.
This article does not imply that today's market is simply wash trading; it is just a knowledge point I wanted to discuss briefly, and it does not constitute any analysis or advice.
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