Individual Trader vs Market Maker

To beat market makers (though you can’t really beat them, VT traders can!), you need to understand the purpose of their activities. Market makers are also traders and their purpose is to make money just like we do.

The main difference between market makers and individual traders is their ability to access large amounts of money, market makers provide liquidity to the market. In other words, they can move the price to some extent by increasing or decreasing the number of orders flowing in the market.

Market makers do the following to generate profits from the market.

1. Invite traders to take positions.

This is achieved by using different price fluctuations to “trick” the trader into taking a position in a particular direction and then reversing it again. We have seen a lot about the importance of Crypto and zero-sum games for a long time, but in order to make a profit in the market, you must first have money on the table (market). To make money in poker, you don’t have to make a strong role, but when you have a strong role, you can win by raising a player who looks weaker than you and increasing your stakes. For market makers who have a full view of the position of individual investors and have a large amount of money, it is almost meaningless to predict price movements, and it is more important to find a duck that will lose even more. Create a situation where you want to enter in a specific direction and use it.

2. Create panic and fear to induce traders to make emotional trades.

This often includes:
⋅ Soaring and plunging
⋅ Spike candle
⋅ Indicator announcement
⋅ “Unexplained” price movements
3. Make a stop and clear the board.

You will be forced to execute a stop and be forcibly removed from the trade. The price range that many traders put a stop on is the best spot for market makers who want to take advantage of their stop prices to fill large orders in the opposite direction. Let’s reduce the damage of stop hunting by devising the position to put the stop and the loss cutting method.

After all, our goal as a Crypto trader is to trade with market makers and ride the waves they create. To do this, we need to think deeply about what the loser mass traders think and why they lose. The method of trading should essentially be based on the points that other duck traders lose (that is, the points that their analysis makes a mistake). This is why general technical analysis often fails.

First of all, if you stop worrying about price movements and try to look at the chart while thinking like a market maker while using the viewpoint of supply and demand, you should be able to realize something that you have never seen before.

Even if price movements cannot be completely predicted, it is possible to predict to some extent the entry points and stop-loss points of other traders. When reading the charts, by considering the perspectives of other traders (retail traders), you will be able to understand the ideas of the market makers that supply liquidity to them.