When the market swings violently—first wiping out Longs, then Shorts—many retail traders quickly blame the “Market Maker”. They assume someone is manipulating prices to hunt stop-losses and profit from retail losses. But the truth is the opposite: these chaotic swings often happen because Market Makers have withdrawn, not because they’re present.

Market Makers (MMs) provide liquidity by placing limit buy/sell orders on both sides. This allows instant trade execution. In normal conditions, they stabilize the market. But during high-impact news or when order flow surges unexpectedly, MMs often reduce activity or exit. Why? Because, like all traders, they are allowed to stay out when risk exceeds control. Preserving capital is not cowardice—it’s survival.

Without MMs, the market loses balance. There aren’t enough limit orders to absorb sudden volume. This makes the market thin, and takers—those using market orders—become the main force behind extreme volatility.

And takers don’t just mean people clicking “Buy” or “Sell”. Stop-losses and liquidations also trigger market orders automatically. When too many people FOMO into Longs, get stopped out, flip Short, then get liquidated again, it creates a chain reaction. Without MMs to absorb this, prices move erratically.

Ironically, the same traders who blame MMs often do so after MMs have left the market. They're criticized for not staying, but if they had, they could have been the first to lose during panic-driven spikes.

So remember: stepping out is a rational act, even for Market Makers.

Prices don’t spike because someone manipulates you. They spike because there’s no one left to absorb the flood of panic-driven market orders. It’s not manipulation—it’s a crowd-driven storm without a stabilizing anchor.

#MarketLiquidity #TradingReality #KnowTheSystem