In the financial market, sharks are extremely experienced and aggressive investors or institutions that use advanced strategies to profit from the small and less experienced investors – known as “sardines”. The name “shark” is a powerful metaphor because:

1. They are predators in the market: Just as sharks hunt smaller fish in the ocean, these investors take advantage of opportunities created by mistakes or inexperience of small players.

2. They move with precision and strength: Sharks are known for their ability to attack efficiently, which reflects the way these investors operate in the market, often making quick and significant profits.

3. They impact the environment: While “whales” move large volumes and affect the market indirectly, sharks are active and direct, often manipulating small players in their favor.

Why are they called sharks?

The name comes from the characteristics of this animal:

• Aggressiveness: Sharks are relentless hunters, just like these investors who use calculated strategies to win in the market.

• Speed ​​and precision: They act quickly and attack exactly where they know there is an advantage, such as in times of low liquidity or volatility.

• Opportunism: Sharks in the market know exactly when and where to attack to maximize their profits, taking advantage of the movement of other players.

How do sharks act in the market?

1. Price manipulation:

• A shark can use large orders to influence market behavior.

• Example: They place a huge sell order to scare other investors, causing the price to fall. As soon as the price falls, they buy at lower prices.

2. Arbitration:

• They use advanced technology to identify price differences between markets and profit from them in fractions of a second.

• Example: They buy an asset cheaply on one exchange and sell it expensively on another.

3. Short squeezes:

• They take advantage of sellers’ desperation to force them to buy back at higher prices.

• Example: They artificially raise the price of an asset to “trap” sellers.

Practical example to understand

Imagine you are fishing in a lake. Suddenly, you see a large, experienced shark that knows exactly where the fish are and catches them all before you have a chance. In the financial market, sharks do this with money: they know how to capture profits, often at the expense of small investors.

The role of sharks in the market

Although they may seem like “villains”, sharks play an important role in the market:

• They bring liquidity, allowing transactions to happen faster.

• Provide efficiency by adjusting prices and eliminating discrepancies.

However, they also teach a lesson: the market does not forgive amateurs. To survive in this “ocean”, you need to be strategic and learn from the big predators.

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