GEVO. Manipulation Short squeeze. How short positions are reset.This example is on paper company Gevo inc - manufacturing. Chemical industry. Specialized chemicals.
I will say that I combined the training idea with the trading one , how the stocks will be relevant for trading now, the potential first profit with confirmation of support can be about + 90%.
Everything that happens now, goals, read below under the description of the manipulation of a short squeeze.
But let's plunge into the past and in order to examine this detective story in order to evaluate this masterpiece of trading art by applying the punishment of the zombie crowd of believers “it should be like that” and “put sure Stop-Loss like a smart uncle wrote to us in a book.”
It was like this ... It seems that the downtrend will last forever. After all, the price over the past 2 years has fallen by almost -99%! Dump from $ 245 to $ 3.30!
This is what happens with real companies, but what about non-existent crypto projects?
After all, almost all crypto projects are built on promises that this “nothing” will cost a lot. Buy and hold, and you and the plant employee will become a millionaire in a couple of months / years. The sweetest lie, the more willing poor John believes in it.
As you understand, in many cryptocurrency projects for lovers of “buy and hold”, to become a millionaire and stop going to the factory is still ahead.
It doesn’t matter whether these assets are pumped up yet or not, but their ultimate fate is the complete disappearance in the near future of the life of poor believing John.
The graph shows a strong downtrend , merciless to investors. But among investors, one must not forget that there are very rich uncles who can also make a mistake. But those who want to fix it. Well, it is clear that after such a fall from $ 240 to $ 3, no sane person believes in growth already, how silly it is. Most traders enter only a short position.
But there are more intelligent people who have thought and decided why we don’t make a lot of money on “100% faith” of people.
The strongest downtrend. Drop from $ 240 to $ 3.30. Minus 99% for 2 years.
As part of this trend, many sellers are going to expect a continued decline in the trend.
But after all, everyone was taught that it is necessary to put Stop-Loss, and if you do not, then you should always close somewhere.
Where will everyone have stops on this chart? Yes, everything of course depends on the point of opening positions, but the generally accepted approach - Stop-Loss who enters a short position will be put for the nearest resistance, that is, we will be interested in the zones above the selected levels on the chart.
If everything is clear and the main crowd has so much faith and become accustomed to the eternal fall, why not take advantage of this and start the domino effect? After all, money is burned only initially to start the process, then only fantastic earnings. How everyone will be "trapped" in a trap. Any inadequate Stop-Loss sizes will be reached. Buy or margin Call.
Gevo inc. Levels where the crowd of "shorts" puts Stop-Loss.
It is in these zones that Stop-Loss of most market participants are behind the resistance.
Large players understand this very well, it’s a sin not to use it if you have enough money on hand for this manipulation.
Perhaps the biggest player is the company itself, which is very interested in getting out of a loss-making situation and making big profits. After all, having for this a certain amount of money you can start an avalanche-like process and get the most unattainable Stop-Loss, thereby moving the market up against the current trend on Stop-Loss. This is an avalanche-like process.
You understand very well what will happen to those traders who have opened a short trend and the price will begin to rise against their position, and even grow rapidly impulse with no chance of pardon. Yes, everything is simple, when we reach a certain zone, the order is executed, that is, the position is closed by Stop-Loss. And we all know that a position is closed by opening a reverse position, which means that if we were on sale, then a purchase is opened to close, that is, we create additional demand for growth. And so on the chain.
And it’s not scary that then the price will return very quickly back to the previous values, because the manipulators will be in big profit, and the trader who caught the margin will no longer enter a short position on this asset. This is what came out of the chart below.
Gevo inc. Growth + 600% at closing short on Stop-Loss.
As we can see, the first strong resistance was + 100% of the minimum value before the short squeeze.
That's how you think who believed that the price will reach these values? It is clear that no one, well, especially since the price will reach the last Stop Loos zone.
For such an action, money was needed only until the first Stop-Loss zone, after which the price moves according to the domino effect. Growth fuel is the closing of short positions. Virtually no one believed in growth, which is why the impulse was + 600%, due to the closure of short positions of those who did not believe.
After a while, the price broke the line of the main downtrend. Price shifted to lateral movement. Wishing to enter the short was less and less, as everyone remembered the previous margin Call.
A year ago, there were two more attempts to punish those wishing to enter a short position in this trading instrument. It was not possible to repeat the short squeeze situation on such a scale. The first short squeeze is + 67% and immediately after it + 27%. It can be seen that there are no more willing traders to enter a short position on this trading instrument.
Gevo inc. The situation is now.
Please note that only on short-squeezes did a large volume go out at the auction. Traders with short positions were squeezed out of the market specifically.
In lateral movement, the price is now drawing a formation that could become a triple bottom. If support is confirmed , the growth potential to the previous local maximum and the first resistance is about + 90%.
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Manipulations.
Someone thinks that manipulations occur only in the crypto market, this is not so, they are everywhere, only in the crypto market they are open and arrogant, as there is no responsibility for this.
In other markets, there is price manipulation, but to a lesser extent, as if the relevant authorities prove guilty there will be huge fines, or the deprivation of a license for trading activities up to the prison.
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What is a squeeze on the exchange. Short squeeze. Long squeeze.
Squeeze (eng. Queeze - squeeze out) - a situation in the financial market when Stop Loss is sharply collected. As a result of the sharp increase, part of the Stop Loss is squeezed out, and part is closed at the “what is” price, this leads to an even greater increase / decrease in the price.
Since positions can be held both in purchase and in sale, both short-squeeze and long-squeeze are possible.
Short squeeze - it happens when sellers (shorts) are forced to close their open positions in order to avoid even greater losses, which only spurs the price even higher. On the graph, the hairpin (shadow) is up.
Long squeeze - exactly the opposite. A sharp decline in the price of assets, forcing buyers (longists) to close their positions. Here, the buyers are already the “victims”, who are forced to close open transactions at a loss in order to prevent even greater losses, which provokes a further drop in the price of the instrument. On the graph, the hairpin (shadow) is down.
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Short squeeze on margin trading.
If it comes to margin trading, the strongest buyer today is yesterday's short. The vicious circle for bears is called "short squeeze" - short squeeze. In order not to be trapped, market participants must understand the principle of short positions, see the potential for a situation that could provoke a “short squeeze”. Experienced traders know how to make a profit with a short squeeze.
The strongest short-term growth waves often occur during periods when a large number of lower players find themselves locked in an unprofitable position due to an unexpected price increase for them. As a rule, these are mid-level traders and so-called “hamsters” market participants with a level of knowledge and experience that is close to zero and close to it. Unfortunately or vice versa, fortunately the bulk of the crowd of the crypto market is precisely this layer of society. In such a situation, in order to get out of the trap they have to actively buy this cryptocurrency in which they are locked at any price in order to save part of their capital and fix the loss. I will explain in more detail so that the mechanism of this phenomenon becomes more clear.
A short position or short-term transaction (from impudent short) is an operation when a trader sells a borrowed coin with the intention of buying it back later at a lower price. After the return of the borrowed coins, the difference between the sale price and the purchase price becomes profit.
You can borrow cryptocurrency from the exchange, which as a guarantee for such a loan requires an adequate amount of guarantee security in the account. As a guarantee, money, bitcoin or other cryptocurrencies, which are valued at a certain discount, can act.
When the value of the coin in which you are in a position increases, the size of the required guarantee for short positions also begins to grow rapidly. If the amount of funds in the account is insufficient to cover the required amount of security, the exchange may forcefully close the position.
Downgrade players usually try to prevent this situation and close the position before submitting a margin call request from the exchange. However, their tactics here are essentially the same - a quick purchase of a coin that has grown in price, and you are in a short unprofitable position on it. If the size of the positions of such participants is large enough, then this situation can lead to skyrocketing prices and the avalanche-like closure of other shorts.
Scalper traders and intraday traders who often open counter-trend trades in the hope of a pullback after active growth can aggravate the situation even more. If the rollback is not realized, then their purchases may become additional fuel for the upward movement.
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The immaturity of the cryptocurrency market provides opportunities for manipulation.
An important feature of the cryptocurrency market, which is often ignored, is its tendency to respond to the actions of individual bidders. By individual bidders, I mean large traders, the creators of individual cryptocurrencies on which manipulations occur, as well as exchanges, which naturally themselves are owners of large cryptocurrency assets. And also, if desired, can affect their price. Roughly speaking, these are market participants who are called “whales” in the slang of traders.
The cryptocurrency market is more affected by the influence of these particular market participants than other markets, due to the lack of maturity and insufficient control of the relevant state financial control bodies.
No fundamental does not work without money support, but money on the exchange without the influence of the fundamental works in such an uncontrolled market perfectly. For example, we are all familiar with such frequent phenomena in the crypto market as "pumps" (artificially pumping prices). Very often they occur even without the release of FUD news on a particular coin.
Also, the entire crypto market is very much tied to the dynamics of bitcoin, which can lead it in the opposite direction to fundamental factors.
In recent years, the market has become more “mature”: instead of the buy-and-hold trading strategy, many have begun to use more advanced methods. Futures contracts, trading with leverage, opening short positions are now available. The more powerful players appear in the industry, the more the community takes on them “tricks” from the field of trading.
More and more traders are using short positions in a falling market, allowing them to earn money in such conditions. And naturally, in such conditions, short squids and long squises often occur. Since the majority of traders take short positions in the bear market, many receive big losses, some especially greedy and not experienced margin calls.
Large investors can begin to behave dishonestly Short-squeeze can be carried out only by a large market participant, such manipulations are beyond the power of ordinary traders. How to do this you need a huge amount. As a rule, such manipulations are done by the exchanges themselves. This is illegal - but everything is legal on the cryptocurrency market!
There are conspiracy theories that such manipulations are carried out by exchanges, thus getting rid of customers who will definitely be in the black due to short positions and withdraw money from the exchange ecosystem.
