Let me tell you a little story first ("This story is purely fictional, any similarity is purely coincidental"). A group of rich people got together and hyped things up to make huge profits. One day, they found a batch of plates on the market that were particularly good-looking, and everyone decided to hype them up. After market research, there were 10 million plates in total, and the price of the plates was about 10 yuan each. These rich people started buying plates at 10 yuan each, and collected 5 million first, which was the bottom warehouse.
Now the price is 20 yuan, but there are still 5 million plates in the market. It is obviously not cost-effective. People want to buy more plates but are unwilling to pay a high price. Now that we have 5 million plates, we can control the price.
Many people in the market were unwilling to sell when they saw someone buying plates, and wanted to wait for the price to go up before selling. On the first day, these people bid 9.5 yuan, and bought from their own people. On the second day, they sold to their own people at 9 yuan. Seeing that the plate price had dropped a lot, those who had plates began to sell anxiously one after another. This is a trap to sell.
There are not many sellers, and some people are still waiting and watching. The price is trading at 9-10 yuan every day, up and down. Some people can't stand the daily fluctuations and still lose money, so they start selling again. This is called shock wash.
Suddenly, there was news that this batch of plates were defective, and the price of the plates dropped to 6 yuan. In fact, they were still selling to themselves. Of course, there were many people who were afraid that no one would want the plates and the price would continue to fall, so they also followed suit and sold. This is a negative impact wash.
Then after the market calmed down, it slowly returned to 9 yuan, and suddenly fell to 7 yuan. Many people thought that there was bad news again and hurried to sell. In fact, it returned to 9 yuan in a few days. The price dug a big hole and was quickly filled. This is digging a hole to clean the market.
After a series of operations, the number of plates is about 8 million, and the cost is about 8 yuan. Do you know why the plates are washed now?
Get more chips at a low price. You can't spend 20 yuan to buy one, and then raise it to 30 yuan and no one wants it. By the way, wash out the undecided people so that the price can be raised smoothly and the cost of raising it can be reduced. Isn't it good at a cost of about 8 yuan?
After doing this, the price went up and down every day, but the general trend was to rise, rising to 15, and then jumping to 20. This plate became popular. It used to be 10 yuan to buy it, but now it has risen to 20 yuan. As the popularity increased, more people paid attention to it. Then the plate seemed to have eaten something, and it continued to rise, slowly reaching 30. Many people couldn't sit still, and heard that it would rise further, so they quickly bought some to make money. Sure enough, it soon reached 40, and the market expected it to reach 80.
The price went up to 50 yuan. Analysts said that this batch of plates contained many trace elements, which were beneficial to both men and women. It would go up to 200 yuan. Everyone bought like crazy, and these rich people sold like crazy. The cost of 8 yuan went up to 50 yuan. In addition to the purchase of 9 million plates, the total is now 450 million. There were too many people buying, and the price was still rising. They sold while it was rising. They sold 7 million plates and made nearly 400 million yuan.
When the market sentiment calms down and the price drops slightly, this group of people start to sell the remaining ones, selling all the way to 30, then buying and selling at 20, buying again, and selling at 10, so that 2 million plates can be turned into 5 million at little cost. Then continue to wash the plates and collect chips for a new round of harvesting.
Many people have misunderstandings about the market maker's wash-out behavior, and always think that the market maker wash-out is for the chips in the hands of retail investors. In fact, the market maker's wash-out itself is not simply for the chips of retail investors. In most cases, it is to reduce selling pressure and operating costs when the market is rising, which makes it easier to pull up and ship at high levels.
Purpose of the banker's wash
The main force is about to start washing the market. I want to hold on to my chips, I want to cover my position, and I will never get off the market. Whenever the price of a currency falls, there are always some people who will subjectively think that it is a wash, and that the dealer will grab a large number of chips when it falls. In fact, if the dealer wants to grab chips, it must be in the form of pulling up, and when the dealer keeps suppressing the market, there must be more retail investors entering the market. In theory, the dealer cannot effectively get chips during the wash process, and can only exchange chips. Because the wash itself is directed by the dealer, and the director of the wash must sell a large number of chips to scare retail investors. So why does the dealer go to great lengths to wash the market if he can't get the chips? What is the purpose? In fact, the dealer's purpose is also very simple, which is to get relatively cheap chips through washing the market.
Let me give you an example. The dealer wants to build a position below 10 yuan, the lower the cost, the better. Now the price of the currency is 8 yuan. The dealer has many ways to do it. 1. For example, pull it from 8 yuan to 10 yuan, and then absorb chips in a long-term sideways market. 2. For example, pull it from 8 yuan to 10 yuan, fall back to 8 yuan, and then pull it to 10 yuan to absorb chips. 3. For example, suppress it from 8 yuan to 6 yuan, pull it back to 8 yuan, suppress it to 6 yuan, and then pull it to 10 yuan to absorb chips in a range. Various methods can achieve this goal, but the comprehensive operating costs are different. The dealer is just looking for the so-called lowest cost method.
The first method may cost close to 10 yuan, and the currency price is 10 yuan. If there is a systemic risk and the currency price plummets, the dealer may have no way out.
In the second and third methods, the cost to the dealer may be only about 8 yuan, which gives him a sufficient safety cushion. Therefore, when the dealer absorbs the chips, he will definitely wash the market, clean up the floating chips that he wants to sell, and put them into his own pocket. For washing the market, the dealer has a second purpose, which is to reduce the selling pressure during the pull-up. This is actually to reduce the cost of the dealer's operation, which is essentially the same as collecting chips at a low price. On the way up, there will definitely be people who follow the trend and enter the market, and there will definitely be capital flight. If the capital that flees is more than the capital that follows the trend, there will be selling pressure, and the selling pressure needs to be eaten up by the dealer himself with real money, otherwise the rise will be hindered.
However, from the perspective of the dealer itself, they are unwilling to take chips at high positions. Instead, pulling up and withdrawing is what every dealer wants to do. To achieve this effect, one thing needs to be done, which is to wash the market. Washing the market itself is to scare away panic orders on the one hand, and to attract followers on the other hand. The followers here are different from the traditional followers. The followers who can enter the market during the falling wash process are all firmly optimistic about this coin.
For example, the dealer raises the price of a coin from 10 yuan to 15 yuan, and then washes the market between 13 and 15 yuan. Then the original distribution of retail investors' chips was below 10 yuan, but now it is in the range of 13-15 yuan.
That is to say, originally when the price of the currency rose to 20 yuan, the profit of the chips was 100%, but now it is only 30-40%, and the selling pressure is definitely different. When the price of the currency rises to 15, 16, and 17 yuan, the number of people selling will decrease relatively, and the buying followers may have the upper hand.
In this case, the dealer has left room for operation. If handled properly, it is completely possible to achieve pulling and withdrawing at the same time. Washing is the exchange of sufficient chips, which can be said to be the basis for the dealer to operate a currency well.
