Don’t be popular. Funny hearing that right? How often do we follow what’s popular, if everyone’s doing it, it must be right! Wrong. What I’m talking about is don’t be popular in the market. I’ve seen so many traders cry happily when longs are 65% shouting BTC moon! Or the inverse when shorts are high.
Do not fall for it, let me explain. We all know there whales or market makers (MM) out there that move the markets using their liquidity to of course make money. The thing is, what most people miss is that MM don’t want to use their funds to drive price alone. So what do they do? They pick on the popular kids. Simply they will push the price a little higher letting #fomo kick in and once it’s at a sweet spot to get a snowball effect going, they reverse the pressure and watch the market pump or dump as a result.
How? All those shorts or longs suddenly start getting liquidated and being sold at market or market stops trigger for traders creating more and more momentum for the market to fall.
Once that’s happened the MM not only made money on his short, but will buy up that momentum as it crashes into his orders and then make money in the opposite direction as well. This is very common in the forex market with banks doing this every single day. The worst example was the crash of the Swiss frank where the Swiss bank pegged the frank to the euro at 1.2. When it collapsed it was brutal because the longs to shorts was 70:1!
Anyway, back to crypto! How does this apply to alts? How often do we see pumps that seem to have no end? They just keep going. You feel like your missing out, how did you not enter that coin earlier. Always check yourself when you begin thinking that way. It’s the goal. Sit out, live another day and try play the next swing up.
I just want to state that you shouldn’t be unpopular either, coins with no volume don’t move. Be invisible. When a coin begins a nice run, trade and let it run, and because you know it will dump again, find a comfortable exit, wait and reenter as you know now that eventually the MM or whale will reset the price for run number two.
Hope that was helpful, and please send suggestions and as always please send me suggestions on our discord.