How trading works and how we should read the market | Introduction Part 1

Trading is a profession that requires a lot of study and perseverance in order to be successful. In publications that I have made on this subject, I have pointed out the most important aspects that we must take into account to operate the financial markets, among these things we have of course the technical analysis, the fundamental analysis and the correct handling of the platforms or brokers that connect us to these markets to be able to invest in these assets.

However, one aspect that I have not mentioned and that we should all take into account, is how "Trading" really works, how we should read the market, as well as knowing who really moves the market and how they orchestrate the big movements that usually leave millions of investors out of the game making them lose money.

Important: What I will comment is my personal experience, capturing all the knowledge I have acquired over time in this great profession, likewise I will be publishing several parts of this topic.

Who moves the markets?

You may think that markets are moved by all your investors and that they drive assets both up and down depending on their feelings or what they think is convenient for that specific moment, in part this is so, however, those who truly move the price are the "Strong Hands (Whales)". All these markets are manipulable without exception and these big money holders always apply the same strategy to obtain profitability in them, basically orchestrating what is called a "Professional Manipulation Pool".

How do they work and what is the essence of these manipulation pools?

I have already mentioned that basically these "Pools" are a group of professionals that orchestrate investments in an almost coordinated way to invest in assets that they consider to be too cheap, likewise other whales are aware of these big movements and also intensify this manipulation by joining in the purchase of these assets.

^{Market phases}

So in a way the novice investors, who are trying to take profits out of the markets but who are victims of the panic over bear markets and bad news from the media, unwittingly sell in despair and become the counterpart these professionals need to buy and accumulate these assets. This period when the whales are gradually buying up is called the "Accumulation" period".

Once the selling interest is over, and the selling pressure is over, the price can only do one other thing, which is to go up, it is in this phase where the professionals start to have their first benefits, besides that those who catch the movement can enter the market and still have some profits, something like a period of euphoria, where everyone can buy so as not to miss the big movement and make money. According to the phases of the market determined by Wyckoff, this is specifically called the "Market Up Phase".

Once the buying interest is decreasing and strong hands detect this feeling, many investors believing that the rise will have no end, will enter the game too late, so the whales will start selling their assets, which they had already bought at very cheap prices because of the bearish sentiment at that time. This action will sooner or later end the demand and cause a collapse in prices. This whole process is called the "Distribution" phase".

Already in this phase when the strong hands (Whales) have distributed all their assets selling them little by little and the demand has already disappeared completely, prices begin to collapse and the so-called "Market Down Phase" begins, giving way to supply in this sense dominates the game and opening new opportunities for profit, but this time investing downwards in certain assets where we have detected this market phase.