How market makers ‘induce’ retail traders with violent moves — why sharp drops are intentional

19 Dec 2025 · 0 min

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A speaker explains that market makers use intentional, 'violent' price moves as inducements to provoke retail traders—likening the tactic to working a fishing lure so the fish will strike. The speaker notes recent observations of reluctant short liquidity and argues that sharp down moves are needed to draw trading activity.

Those are called inducements. It's kind of like if you fish with a fishing lure, you kind of work the lure to make the fish. You got to put some action on that lure so the fish will strike. Right. So the market makers collectively do the same things. You need that violent down move. Because I've been watching Liquidity for the last week or so, and the short liquidity was a little bit reluctant to come in.