As I explained in the last post going over market manipulation, whales use their deep pockets to create things called sell walls. If you missed that one, be sure to check it out!
Today I want to explain more specifically what the whales are looking for so that they can gain the most profits.
Yes whales absolutely manipulate the crypto markets. The whales place huge sells walls hunting for stop loss orders, inciting panic and then scoop up discounted coins.
Key things to remember:
- They typically look for coins that have lower volume on the exchanges so they are easily manipulated.
- They also tend to do this with coins that they think will be valuable in the future.
They are looking for stop loss orders.
Stop losses are orders set by traders who want to ensure if the coin they are trading drops to a certain price they will exit that position. Stop loss orders will automatically execute and they will sell however many coins were delegated to that order. It’s a safety mechanism that traders use to protect themselves from holding a coin that crashes and burns in a very short period of time.
The thing is, most traders set their stop losses at what are called psychological levels. Usually these are whole rounded numbers because these numbers make it easy for that trader to comprehend how much they would have lost if they sold at that level. You might notice that these types of numbers often get a lot of attention in the media when coins hit all time highs. For example, there was a lot of anticipation as Bitcoin reached the price points of $5,000, $10,000 and so on up until $20,000.
You also might notice that many individuals who like to make public price predictions use rounded whole numbers as well.
Getting back to how whales play into all of this…
Whales come to their position of wealth by being smart, not by getting lucky one time.
They are well versed in spotting psychological levels and they are well equipped for triggering them... and you better believe they love being able to purchase your coins at a discounted price.
If you are a relatively active trader with stop loss orders and this kind of activity has resulted in your coins being sold at a low price only for that coin to return and perhaps reach even higher levels than before, there is a way for you to avoid being an absolute victim.
Stay tuned for my next post which will give you some insights on how to protect yourself from being a victim of this and how you can possibly see some benefit from the whale activity as well.
If you’re lucky, if you can read the signs, you can ride the wave that the whale creates and reap the benefits.
DISCLAIMER: You better believe there are no guarantees to be found here and this should not be thought of as a reliable trading strategy.