What is a sell wall?
A sell wall is a tool used by a rich individual,or group of rich individuals, to manipulate the price of a stock downwards. A large sell order is set at a specific price by the whale(s) to prevent higher sell orders from executing.
A sell wall looks like this on the depth chart:
How does it work?
This is best explained as an example.
A wealthy person, we will call him John, tells a group of his wealthy friends that he wants to make money on a particular stock. This could be for a number of reasons such as:
The stock has a lot of room to grow
The stock can be easily manipulated
The stock has a lot of potential to get big in the near future
Richard and his friends decide that it's a good idea. They all want 1 million of X cryptocurrency. Unfortunately, in the cryptocurrency market John and his friends can't execute all the buy orders at once or the prices will skyrocket!
To achieve 1 million obtained goal, they decide to set up a sell wall, and manipulate the price downwards. They do this in steps:
They accumulate together. They will maybe get 250,000 of X crypto each. In their specific market, this didn't affect the price that much. Great!
They now set a specific price they feel is low enough for them to be able to reach their 1m X crypto goal. For this particular crypto they decide to all sell their obtained crypto at $2.40.
Now, between John and the group, there is >1 million dollars worth of X crypto selling for @2.40 on the market, a seemingly undervalued price.There is SO much volume being sold now, buying pressure cannot eat through that wall in a reasonable time frame - it would take a very high buying pressure to do so.
What also happens next is the key: nobody else can sell above that sell wall price until it's gone. The result? People need to sell lower than the sell wall in order to liquefy their stock. This drives the price downwards.
John and his friends can now safey all get to their 1m X crypto mark without raising the price exponentially! When they decide to rid their sell walls the price moves up accordingly!
How can you use this to your advantage?
A common thought is that the main goal of a sell wall is to instill fear into the weaker hands so that they sell by the thought that "Oh no everyone is selling!!" While it's not the main purpose, it probably does happen a little bit. People get nervous when things a large volume of crypto is being sold.
As Warren Buffet said: Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.
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https://steemit.com/crypto/@jaggermoon/sell-walls-what-they-are-what-they-do-and-how-to-spot-them-repost-from-reddit
Yes, I know and that post was taken some where as well but this explains it really well and I had to share.