The main dealers and retail investors are naturally adversarial; the dealers will use various means to spread false information or create false technical breakthroughs to lure in buyers and sellers, washing out retail investors' money. Many times this is not an illusion of retail investors, but a real phenomenon.
The reason dealers dare to do this is that we all have a herd mentality; they understand this pattern, so they seize our emotions and exploit our human weaknesses to make money.
So, thinking from another angle, we can think like them, follow the trend to earn their money. This is a psychological game that requires you to have a strong ability to empathize and control your human weaknesses.
So today I will discuss what the dealers are really afraid of, analyzing their weaknesses from a technical perspective, which you can then exploit to make money.
1. The dealers are most afraid of retail investors seeing through their operational methods and not being fooled at all.
The most commonly used tactics by dealers are 'shakeouts' and 'rallies.'
Shakeouts usually occur at the bottom, where dealers create short-term rapid declines to instill panic, scaring off unstable retail investors. During rallies, they act quickly, not giving retail investors the chance to enter, leaving them to buy at high levels.
If we can see through these methods of the dealers, maintain our composure during panic at low levels, stay rational during dealer shakeouts, avoid cutting losses at low points, and not blindly chase prices during upward movements while maintaining a fixed trading rhythm to just ride their coattails for a bit of 'profit', then we won't be trapped at high levels, and the dealers won't be able to do anything to us retail investors.
2. The dealers are also afraid of retail investors having strict trading discipline and strong execution.
Dealers love retail investors who chase highs and cut losses, especially those who have no principles and just go with the flow. Because the weaknesses in human nature allow these retail investors' money to flow into the dealers' pockets.
So, in a market where everyone is trading wildly, if you have your own principles and trading rules, then you are among the elite because you won't go with the flow, won't blindly follow the crowd to chase highs and cut losses; you are rational, you are thoughtful, and this is what gives the dealers the biggest headache.
For example, when the dealers are pressing down the market at low levels to create new lows during a shakeout and we exit to stop losses. Afterwards, the market quickly recovers, creating a false breakthrough. If we have a well-defined set of rules, we can decisively re-enter the market after the false breakthrough and still profit from the market's upward movement, which would drive the dealers crazy.
Also, when buying at high levels, if you have a well-defined trading rule and strict stop-loss standards, quickly exit once trapped with only a small loss, and preserve your capital to seek further trading opportunities next time, such rational individuals also give the dealers a significant headache.
Because if everyone is clear-headed and rational, who will the dealers harvest for their profits?
The most important thing in trading is to have strict stop-loss and take-profit standards. As long as you can overcome your fears and greed, stopping losses promptly when wrong and taking profits when right, then nothing in the market can trap you; it’s just a matter of earning more or less.
Of course, sometimes we still might accidentally fall for traps, but as long as our stop-loss and take-profit rules are clear, our losses after being trapped are limited, and we won't end up without any funds left, which is something the dealers fear.
Dealers enjoy watching us lose, relishing the thought of us losing everything, so they can drain all our money without any sympathy, even considering us foolish. Therefore, do not fall into the emotional traps they create.
3. The dealers are most afraid of traders who do not blindly follow the crowd.
One classic tactic of the dealers is to spread so-called 'insider information,' which is very appealing to traders who like to take shortcuts or those who have already suffered significant losses and want to quickly recover their funds.
Once such insider information is released, many will rush in, spending a fortune on a fake message and ending up losing everything.
In fact, if we think carefully, the information we can see in the market has already changed hands countless times. Even if someone has very accurate information, there is no need to share it with everyone, because the less people know, the more valuable it is. They can quietly amass wealth; why share it if not to harvest retail investors?
So dealers exploit retail investors' desire for easy profits, guiding market sentiment through insider and public news to harvest from us.
The true and false information surrounding the approval of Bitcoin ETFs caused rampant price spikes and drops, leading many to get liquidated in this news. I believe many still remember it vividly.
So in trading, we must maintain a rational and calm state, and have our own thinking ability. If you want to get first-hand information, it might be more reliable to investigate on-site yourself. The dealers are most afraid of retail investors like us who are pragmatic and not easily swayed by emotions.
In simple terms, dealers are the best at exploiting the fears, greed, and lucky mentality of retail investors. This is an inherent trait of human nature, and it inevitably exists, driving the entire financial market's operation.
Dealers use larger funds, more information, and resources, taking advantage of the weaknesses in retail investors' nature to reap profits. If we still indulge our human nature and trade without any thought, we will inevitably become prey.
The only way is to see through human nature, think rationally, and form your own trading rules to avoid being harvested, and even catch a wave to make some money.