How I lost 50% of my investments in 15 days
I came to Binance to make a living by trading crypto currency. Before entering the market I did thorough academic research on trading for several weeks. Entering the market, in a few days, I have made 100+ trades, 90% of which generated small profits and the rest 10% were big losses. And finally, I lost more then $150 in 15 days.
Here is what I have learnt from my experience in Binance:
Large purchases by "whales" (individuals or entities holding substantial capital) can create sudden upward price spikes due to significant demand in a short time. This draws attention from smaller retail traders who believe the price is breaking out and jump in, creating additional upward pressure.
Whales can then distribute or sell small amounts over time through their "associates" or other accounts, creating liquidity to absorb retail buying without significantly dropping the price.
After building up enough liquidity (from the buying frenzy of retail traders), the whale can sell a large chunk, causing the price to plummet. This sale is often just above their initial entry price, allowing them to exit with profit, while most retail traders incur losses.
Additionally, coordinated efforts (fake news and announcements) by whales or groups to drive up prices (pump) and then sell off (dump) at higher levels also helps the manipulation process.
Another way they destoys retail traders is called Wash Trading. This involves creating artificial market activity by repeatedly buying and selling the same asset, creating the illusion of interest and drawing in retail traders.
This occurs because crypto currency markets are decentralized and largely unregulated compared to traditional stock markets, making them susceptible to manipulation. While platforms like Binance do not directly support manipulation, their reliance on liquidity and trading volume can inadvertently benefit from such activities. For example, more trades generate more fees.
Manipulation often occurs during low trading volume periods, where fewer orders make it easier for whales to move the market.
Moral of the story: If you want to earn steady income, invest on stable coins, avoid trading where any sudden spike has occurred and lastly but most importantly, control your greed. Happy trading folks!