How market makers shake you out - ZEC

Dear traders,

This is an educational tutorial showing you how market makers shake you out of a long position.

Most retail traders would recognize the blue box on the chart as a level of support. Therefore, it makes sense for retail traders to place their stop loss closely below, because in theory the bullish trend should turn bearish when support is broken to the downside.

Market makers know how retail traders think and therefore push the price lower with a wick (as visible on the chart). This wick, which dips below support, causes many stop losses to trigger of retail traders.

When a retail trader's stop loss triggers (of a long position), it turn into a market sell order as many of you might know.

Now.. all these triggered market sell orders create huge buying liquidity for market makers to stack up cheap, without increasing the price instantly, because there is enough buying liquidity (provided by stop losses of retail traders).

Be careful where you put your stop loss. You do not want to give up a great entries in a bull market!

Goodluck,

Doctor Hugo

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