A hidden threat to traders is a tactic called the "whale trap." This strategy, used by large investors called "whales," is aimed at manipulating the market to profit at the expense of small traders.
What is a whale trap?
"Whales" are investors with large assets who can influence the market with their large trades. Here's how their scheme works:
1. Artificial price increases are a bait:
Whales are buying up cryptocurrency en masse, causing prices to skyrocket. Retail traders, afraid of missing out, start buying.
2. Price collapse â the trap is triggered:
As soon as retail traders invest, whales sell off assets, causing prices to plummet, leaving small traders at a loss.
3. Whales' Profit:
Whales sell at the peak and then buy at low prices during panic, making a profit.
Why does this work?
Whales play on market psychology, using FOMO (fear of missing out), provoking impulsive buying by traders.
How to recognize a trap:
- Sudden increase without news or reason.
- Low liquidity of the asset.
- Suspiciously high trading volume.
Protection:
Do your own research, don't panic and use stop losses.
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