Market psychology
Market, predictions, intuitive decisions – big emotions, masses with expectations and fear.
The task here is to predict the behaviour of groups.
The market is psychology. The better we understand it – the better we'll get.
Not many write about it, for the most part, it is our observations and personal opinion.
There are 4 general psycho types of market participants:
Whales – they create market movement;
Bulls – funds and legal entities managing depositors' money;
Independent traders, and opinion leaders (TA);
Hamsters.
Whales:
Choose a promising industry;
Understand allocation – collaborate with large players, negotiate and buy from hamsters;
Until they gain a large share of the asset, the market will not go up;
During the consolidation stage, they create a negative background, so it is difficult psychologically for the rest of the traders to buy.
Release news/info, and push TA, so that traders who work based on the analysis come in;
Big players provoke emotions in their favour;
If a big player gains a position, he can go at x10 (no counter offers) to the level of breakthrough of the global trend, so that everyone starts buying;
Raise prices fast and roll out positive news.
If FUD is flowing and there is accumulation on the asset, then it can be evaluated as a strategy for reversal. When following Whales, don't place take-profits.
The market is evolving, and the whale game doesn't always work out because there are more and more big players.
Funds and legal entities managing depositors' money:
Whales can survive a dip, and liquidity is an issue for them: they can buy at 4, then at 1, knowing that they will sell at 20;
Funds can't go negative; there are reports -> hamsters will take the money.
Whale knows what positions the funds will quit -> dump with hold and with deprivation of funds to develop;
The whole fight is for liquidity. As long as someone is in position, the whale won't pull up.
If there is an accumulation of a position and news comes out about the fund's exit from the position, it is a sign towards further growth of the asset. Sometimes funds quit on the pump – it looks like the whale gives an opportunity to sell, to exit.
Independent traders and opinion leaders (TA):
Run channels, and create liquidity;
Any whale is trying to align their actions with TA. Pumps and dumps are " designed" for TA to show movement for traders to make things work;
The big player lets traders trade on TA so that they gain their 5% liquidity.
Hamsters:
Apathy during the fall, euphoria during the rise;
Those who pay for other's profits. Everyone makes money off the hamsters;
Playing against common expectations.
Now, what kind of investor are you? Can you beat the market from your position?
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