How to Utilize Equal Lows Part 2

14 Jun 2023 · 1 min

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In this segment of the YouTube video, The Art Of Crypto explains how market makers profit by forcing traders to lose money through systematic liquidity removal. He describes the common psychological trap where traders hold losing positions out of greed, hoping for a reversal, only to see the price take out all liquidity and then reverse. He highlights a specific trading guideline—Pro Tip #3—stating that when a key level such as support is breached, the usual instinct to short the market is often a trap set by market makers. Instead, traders should recognize that the break may be a liquidity sweep rather than a genuine breakdown, and avoid entering positions that fall into this manipulation.

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So it is in their best interest to cause you to lose money. Now, you've probably been in this situation before where you hold onto a trade too long and you think, hey, it's going to go to the moon, so I'm just gonna hold on longer. And that greed is what ultimately causes you to fall prey to this, where they clear out every single point of liquidity. I want you to notice how the price always just takes out the liquidity, right? And then it reverses. And this is going to be your pro tip number 3. Whenever you see a key level like this get taken out, for example, when support gets taken out, a lot of you are probably trained to go short when support is broken because unquote, support is broken, you know, it's, uh, it's gonna— it's a breakdown. But that's not how it works, especially in the eyes of the market maker. And that's what I'm trying to educate you on so that you don't fall prey to this trap again.