Pump it up
The ones who remember 2013 and Wolong will know.
Majority believes that markets move randomly and reflect the collective wisdom of investors, the truth is quite the opposite. The invisible hand is a myth. Market prices has always been manipulated by the government's visible hands through influencing laws and regulation. Insiders control markets and manipulate them up or down for profit. Manipulation is everywhere, undeniable and unavoidable. It happens on a very large scale throughout every single financial markets out there, stock, bonds, commodities, currencies and so forth. There are other types of manipulation, such as social and news manipulation, hence I called it: The Game of Deception.
"Whale watching" is a trading strategy of monitoring the trades of the most influential or wealthy investors, known as "whales". "Whales" refers to traders with significant bankrolls that their actions impact heavily on the markets. The purpose of this book is to trade in the shadow of the smart money, understanding how market manipulation works, and become profitable by understanding.
Most traders do not understand volume implications and how vital it is in their analysis of any of the markets. Given at any point of time, traders are constantly long, short, holding, some waiting to get into the market, some already in profitable positions. "Long" means when a trader buys, in this example: DOGE/BTC hoping that the value of Doge will go up against BTC, the "Short" means the opposite. Whenever a trade is entered, the exchange will register this as volume on a continuous ongoing basis. Volume represents activity and it relates to the price bar on your chart. Chart reflects clearly and is the reason why it is behaving the way it is. "Whales" contributes 70-80% of the volume you see, which is why it is large enough to alter the direction of a market. I will not go into identifying the traces of a whale activity in book one, but rather my primary focus would be explaining how manipulation works, and the thoughts of a market manipulator.
"If you know your enemies and know yourself, you will not be imperiled in a hundred battles" - Sun Tzu
Individuals trade the market for a purpose, and that is to profit. Many of you are meticulous in entering a trade, cracking your head whether the price you are about to buy or sell is too high or low, although some might possess knowledge of technical analysis, you are still at a loss in the end. This is quite common, for you have not understand the characteristic of a "whale". They are ruthless, swift, cunning, very very patient and most importantly, they do not obey the rules of the game. A price will never be too high or low for them. Prices might have soar 100%, 200% and it will never be too late for them to enter. Buy high? Sell higher! Sell low? Buy lower!
To almost everyone, it is simply just pump and dump. However, the truth is, there are many stages to make a pump and dump successful. The stages includes:
- Position Building
- Suppressing prices
- Test Pump
- Actual Pump
- Shakeouts
- Re-allocation and distribution
- Exiting - The Dump
Position Building
There are multiple ways to build a position. This is the stage where we will require a significant amount of market share to do pumps. The most common method will be micro buys. Through placing of buy order in relatively small amounts, it avoids driving up prices and also masked our existence. Some alternate coins, however, has really low amount of volume, and it will take ages to build up our position through micro buys. In such cases, we will be force to do a pump up, to encourage sellers. Pump waves will be gradually decreasing, smaller and smaller, forcing out all sellers so that we can have what we want - market share. This has happened many times infact to date, such as Doge/BTC, UNO/BTC, Dev/BTC and GLC/BTC.
Suppressing prices
Contradicting isn't it? That we are willing to pump altcoins up a few times of it's value worth before driving down it prices. And yes, like I have stated earlier on, prices does not matter to us as long we can sell higher. However, like every other business on the industry, everyone would want their costs to be as low as possible. In this very stage, we will pile up whatever we have bought, to suppress prices as much as possible through sell walls so that we are able to do our buying cheap. Our sell walls are usually just enough to appear as though as it's the invisble hands of the market, minor supply over demand.
Test Pump
Before a real pump happens, whales like us tends to test the market. Why? Reason is simple. It is to ensure that we have absolute control of the
market. Test pump, like shakeouts, actual pumps, re-allocation and distribution, happens many time throughout the pump and dump process. By doing a test pump, we will roughly get an idea on where our next resistance will be and how much floating chips are around ( Floating chips refers to weak hands). Whales hate weak hands, they do not act as any form of support for us during a pump, and we will are always determine to get rid of them in the early stages, no matter how long it takes.
Actual Pump
The term pretty much explains everything. When weak hands are being forced out, and we have gain the market share that we expect, we are ready to move.
Shakeouts
Shakeout is a deliberately forced price reaction, whose purpose is that of stimulating public selling in order to facilitate the accumulation of speculative positions. This is the most aggressive part in wiping out weak hands of their positions. Sometimes during a shakeout, we can be so aggressive that we drive prices so low that's it's way below our cost price. Losses does not matter to us, it is only on paper, and we have enough bankroll to pump prices back up. Individuals who have no experienced or unable to withstand such psychological torture will usually exit the market at this stage.
Re-allocation and distribution
Re-allocation and distribution usually serves the purpose for us to re-balance our portfolio. In a test pump, we might distribute you some of our shares (coins). The logic is quite simple, sometimes during a pump, buying into our own walls and others, we bought more than expected. We will have to release a few back to the individual traders. At times, it serves as a support, and reduce our risk exposure or being a "safe trap". What do I mean by that? For example if you were to distribute you at $5 and then we were to drive prices back down to $4.50, we will know that the total amount of shares being distributed at $5 will not be selling at $5. Traders tends to exit when in profit and are unlikely to exit with breakeven costs. I used the word "safe" is because, this is not the part where we will be dumping. There are alot of re-allocation and distribution, like shuffling a pack of cards throughout the entire process, and prices tend to go much higher than the price that you are "trapped" at.
Exiting - The Dump
This is usually the last stage. The part where we take our profits and
completely exiting the market. There are many exit strategies available to us. I will be revealing some of it and explain. The most common mindset everyone had is that we either micro sell or massively dump into buy walls during a dump. Theses are just the basic. Usually by exiting via this method, gives us really a bad price to sell at.
One of the exotic methods we used : "Exit during a pump". This works by having sell walls in place, and buying into our own walls again and again aggressively until the crowd follows. Once they follow, they will be biting into our walls. Hence we are able to exit portions of it, bits by bits, rinse and repeat a few times, we will be able to exit the market completely.
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Have you watched the "Fair Pump" movement? It's...interesting.
I'll admit to messing one up, big time, and losing...20 bucks. Oh well.
It's a fascinating thing to watch. Thanks for the breakdown.
Never heard of it. Does it mean that eveybody has an equal chance for the pump?
I think it's at http://fairpump.net. But I'll save you the trip.
They use Bittrex, and they take a list - usually 8 coins - that they make public within 20 minutes of the actual "pump." Then, there's a random chain selected and there's a random hash selected and some such...once it's confirmed they then encourage everyone to "pump."
My problem was that it was one of my first times using Bittrex, and I didn't have everything set up correctly. As a result, I thought I was buying at price x, but I was buying at whatever the market could bear. I ended up buying the coin at its height, then watching it implode - all in a matter of minutes. Like 5 minutes.
The first few SECONDS of the pump are the biggest - if you're not in and out in 30 seconds, forget it.
Again, it was capital that I was prepared to lose.
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