I remember back in the day when I was into trading and after a while realized that I did best when I traded as little as possible, preferably during short time periods when everything and their grandma's token would pump. Back when Binance and other exchanges would allow anyone to create as many different accounts as possible and they had just introduced futures trading which was riskier and dumber of me to get into. I thought to myself, okay, I'm seeing all the buys and sell orders go through, yet it's almost never going in my direction, why is that so? It wasn't really just about that but it got me to thinking deeper into the process of what these exchanges and tools made possible.
Doing some trading here on our small layer 2 exchange kind of also reflects how it is for certain people in power to manipulate markets to their will. Certain tokens have very little liquidity so if you really wanted, and the ease of making alt accounts and obfuscating the trace of the transactions, you could with not a lot of money play around with some of these tokens to move them up or down. I haven't really put much thought on that part but I imagine it's pretty similar and easy for whales to do the same, and even worse, exchanges themselves.
After the shitshow of FTX, you really ought to think what those doing things better and less chaotic might be doing on a daily basis. Of course they'd never admit to it and most of them are going to take that activity to the grave, but the possibility is still there. As an exchange, especially one of the biggest ones in the world you have a lot of power and possibilities to do things, and when you can get away with it many will often take that opportunity. You'd think they should be happy with the fees they earn from trades, the costs of becoming listed or giving away stake to them, etc, but I'm pretty sure some of them think "why the fuck not?" because that's kind of the world we live in these days.
Either way, the idea popped up in my head that when trades are occurring it's not as black and white as exchanges may make it seem. Many of them give people tools to trade with like open API's to their accounts allowing for self-created bots to trade back and forth, you really ought to think how much of that massive daily volume is real and how much of it is just Binance trading back and forth with itself.
Think about it, if they own the exchange they have so much info on everything going on there, who do these buy orders belong to, who do these sell orders belong to. Who just made a deposit, what did he do last time with the deposit of token x, what may he do this time? Especially with AI and analytics being on a completely different level these days they may know more about your trading behaviour and pattern to predict what's going to happen with your balance better than you do. Aside from trying to be unpredictable to prevent these being used against you, it's still not in your favor as bots and actions on a centralized exchange can happen faster than you can click a button and that action going through.
People say futures and margin trading are risky due to the high margins costing you higher fees and leaving less room for error, but I'd say there's way more risk involved there from exchanges or whales trying to take the money you've put into those positions. Now I'm of course not accusing the biggest exchange in the world of doing so, I'm just saying there's a possibility and we can't know if that is 0.
Imagine it's only a few months until the Bitcoin halving, there's only been good news coming out towards the crypto sphere and BTC itself. Institutions and banks literally announcing they're going to be purchasing it (just as an example) so you start opening up long positions in hopes of making 5-50x more profit than just buying and holding BTC in spot positions after sending it to your custodial wallet (of course). You check the stats they provide you with, everyone else is long, this is failproof you think to yourself. Who needs stop losses, no one is that stupid to sell into these news and upcoming supply shock. You then go for dinner or sleep and wake up to an email letting you know your position has been liquidated. What happened?
Well, a lot of things could've happened. They could've wanted to take out those kneejerk longers that put in positions recently or had too high x on the margin loans. They could've sold actual BTC on spot just to cause the market to dump on the futures as well, partly to take out longers, partly and maybe more importantly to fill up their own long positions a little lower. They could've traded from one account towards their own accounts, practically selling close to none of it off but giving the illusion that a lot of selling is occurring causing others to sell into their buys. Worst of it all, it could just be exchanges creating fake but in a way real orders they don't really lose anything on fees on because they are the ones who earn the fees.
This is something that also came to me during the NFT hype, so many of the projects if you only spent a little time you could track how most were coming from new and unused wallets being funded through exchange deposits and buying up nft's to give you an illusion that there's a lot of interested buy volume. Along with fake followers on web2 and fake accounts on discord aside from a few fanboys hoping their 0.05 eth investment will 10x in the next month or cause being active on discord meant you get a cool role and maybe a free nft. You were basically being used to scam others and most likely yourself if you value your time.
Point of this post is to question everything, the things this technology allows and makes possible through anonymous wallets and transactions it's really not that difficult to get away with these scams that are only looking to make a quick flip and leave you holding valueless "art" if you wanna call it. Will talk another time about the generative nft hype which I think was utterly disgusting and set back real art on web3 years and left them high and dry. Similar to trades, where good traders only look at how much out of all their trades they've profited instead of just trying to always be right, the same thing goes for these flip attempts. It doesn't matter how much they paid an artist to generate the artwork on these projects, it doesn't matter how much they paid in fees to fake volume and interest, even if they only profit an eth or two, they will keep doing it and that's one of the reasons this space is full of this shit and it will keep staying that way as long as we keep feeding them.
Luckily we haven't seen much of that here on Hive in the nft scene, mostly cause there's no real big volume here but I prefer it this way. On hive-engine there's quite a lot of arb bots but I haven't witnessed any manipulation attempts other than whatever that was that happened to that football trading card game from a few shitty actors.
Another great thing about Hive is that we can discuss and alarm others when we suspect foul play or shady activity and they'll be able to see and determine it themselves compared to the things that happen on web2 where you're either silenced, blocked or just hidden in the masses.
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Stocks are the same it's a few big players manipulating the markets in their favor. I could extrapolate this theory to capitalism as well. You have people pulling the strings from shadow account, grey money and overtly through news organizations. The goal is all the same to consolidate power and make more money. If you think that this world is anything other than trying to consolidate wealth and power you are naive to the situation. It happens on Hive because it happens everywhere, but it's just the world we live in. As the 99% we just need to do our best to break the system while trying to get our to live within the system. It's going to take something major to change mechanics and crypto was what I was hoping would change it.
Can't disagree that it happens here too but at least you don't have an edge against you here, everyone gets a chance with minimal risk.
Fact, Hive is one of the only non risk investment. It's actually pretty cool considering all you need to do is to interact to gain stake.
I'm always skeptical when it comes to any type of hype, especially the NFT ones.
I remembered that it just came out of nowhere and suddenly everyone is just talking and having a go at it without really realizing what they are in for.
Seeing some of my close acquaintances got "burned" and is now finding it hard to pick themselves up is heartbreaking 😣
For me I always feel there's something behind those leverages on futures, I feel there's an inner settings from just the 2x 5x 10x they present to us.
How the fucc will the market come exactly at my 12.58 stop loss and take me out before immediately going the other way? - not once not twice, and losses hurts more than anything
You earned a follower today... So much information and easier to understand than the most articles I have read about trading...
Cheers, and welcome to Hive!
Thank you so much ☺️
It's out of context question but I want to publish a blog post in Ecency but I am not able figure out how long it will take before I can get enough credit to be able to post... Can you help me understand?
https://leofinance.io/threads/samueluche07/re-samueluche07-2viqlunmz
The rewards earned on this comment will go directly to the people ( samueluche07 ) sharing the post on LeoThreads,LikeTu,dBuzz.
Always approach with caution, banker/exchange/pyramid scheme always win. When futures arrived is when I elected to avoid trading route completely.
Yeah, the sector is in need of a massive overhaul no doubt. These cowboys have to go. But I rekon once that happens the Trillion dollar market cap will also diminish.
I wonder what is really holding it all up.
In the case of an exchanger, I never trust it fully there exist many reasons. Firstly I know very well that if everyone takes a long position in future trade and the price pump then the owner of the exchanger will face a loss and they won't allow to bring loss for them. Then they will liquidate the long position first before to start to rise up. The same thing is applicable for the short position.
You're trading against other traders there usually, that's what the interest/fee thing represents, basically you're trading against those shorting if you go long. With greed these days, though, either whales or exchange owners can still decide to take everyone's money.
In some respects, just like the story of four blind men describing an elephant we can all benefit from the perspectives of others .
And also benefit from a new personal perspective when we step back and give something a second look.
I've always have this thought that Binance has these data, they use it agsint traders, so, when you want to trade, you might see a different pattern and fell for the hook. You end up buying high and selling at loss.
Some guys too have data analysis to create a trading pattern that predict market and it's 90% correct.
...
Bots have become a major part of trading in 2008. (Idea behind Automatic Trading Systems goes back to 1949.) I am pulling this number from my ass but 80 to 90% of trades done in stock exchanges are done by ATS. (Given in 2014 this number was 75% and there is no reason for it to shrink but grow.)
So think about how much volume of the traditional stock exchanges is from just bots trading stocks back and forth. Just a thought.
Hmm
I am one of those who always say that trading future is very risky and that is why I do not like to go to it at all or give it a try but your explanation gave me a different view about it
I agree with you, seeing things from a different perspective can help us learn and be ready to adapt to changes. I kind of like hive for that.
High Frequency Algorithms, they are called and they are the ones used by the whales or institutions that move the market to make their operations. These programs are expensive but they gather a great deal of information, they know where every penny is, they track every order, meticulously. And they indicate who is more leveraged and who is less, and where they are located. In other words, whoever does not know this reality is really lost.
Information: well, I have a theory about this. No news moves the market, unless it is something unpredictable. Like the Twin Towers, to give you an example. And here there is a lot to cut through. The market is moved by the whales and they agree to give the news that they already know a long time in advance. Information is power. Never better said.
The less you are in the market, the better; the less you are leveraged, the better; as long as you have a plan and always, always stick to it even if the world is coming to an end, the better. That's the only way to win there.
@tipu curate
In our ever-changing and complex world, questioning from different perspectives is crucial for personal growth, learning, and building a more inclusive society. It encourages us to be open-minded, adaptable, and receptive to new ideas. So, let's always approach things with curiosity and an eagerness to explore the many facets of every situation.