Market makers, brokerage firms and investment banks are the big whales in the market, they are the ones who control supply and demand. They are the ones who move the market as they place big orders which create big movements known as the supply and demand zones.
Who are the market makers, brokerage and investment banks?
Market maker. These are the big players in the market and they have the markets in their hands, markets are not moved by retail trader so market makers have large sums of money with it they can control and move the market in any direction they want through placing orders.
Brokerage. These are firms into the finance business and they trade on behalf of investors as investors invest their money and these firms trade assets according to investor specification.
Investment Banks. Small banks they are also investors and they do so through investment banks. These are large banks just like Deutsche Bank, Bank of America and others, they can lend small banks money or buy CDOs from them and then sell them to investors.
How do they operate?
Just like any other business they are also into buying and selling but since they have markets in their hands they know exactly when to buy and when to sell and as usual the always wins. They create demand by accumulating orders and when the price is on the rise retail traders will suffer from FOMO and those big whales will offload their positions and start supplying.
They create what are called order blocks, usually if the price is going up it will reach a certain point and comes back to collect orders from the previous order block and they also use voids and those voids must always be filled and gaps as well and they have to be closed as well.
If they manipulate what’s the motive and how do they benefit?
For a business to be called a business it has to be profitable unless it’s a nonprofit making organization and these big whales are into money making business so making money is their motive. They make money through commissions, rollover costs, spreads and losses from investors.
If they benefit whenever investors losses money then there are higher chances of manipulation as they will know all price levels on which they will make big movement, and sometimes create false moves and use spikes to wipe off stop losses.
So that’s why only 10% of traders make it in the trading businesses and the 90% losses money. Retail traders when they win they win small and when they lose they lose big so they can grow a trading account for a month making small profits but those small profits they can lose them within a few day.
We cannot conclude to say they manipulate markets but we can just say there are higher possibilities of manipulation and they can do so if they can and if they want.