Understanding the Market Makers' Strategy: From Longs Liquidation to Shorts Hunting

In the modern financial market, market makers continuously operate with elaborate strategies to control the emotions and actions of investors. These strategic moves often surprise both seasoned traders and newcomers. This article will analyze in detail how market makers operate through subtle steps, from 'clearing out' long orders ( to hunting short orders ).

1. Clean Sweep Strategy for Dragon Order Market makers often start by creating strong selling pressure, forcing long positions – i.e., buy orders with the expectation of a market increase – to be quickly liquidated. When the market shows signs of being overly saturated with buy orders, large traders may use high leverage to trigger an automatic liquidation cascade. These sell-offs not only drive prices down rapidly but also create a sense of panic in the trader community, paving the way for further actions. Example: A continuous upward trend with an increasing number of long orders may become a “bait” for market makers. When the price reaches a technical resistance level, they may trigger automatic sell orders, leading to a strong liquidation of long positions.
2. Short Order Hunting Phase After the long orders are 'cleaned out', the market usually turns around with buying pressure from traders who have bet on the decline. At this point, market makers implement the opposite strategy - hunting for short orders. They take advantage of the psychological decline, as short sellers also face risks due to leverage, to create price fluctuations to capitalize on their position. More in-depth analysis: When stacked short orders, a sudden price spike can force short traders to cover their positions, creating a similar 'short squeeze' scenario as with long orders. This is a sophisticated counterattack that helps market makers seize opportunities to profit from market reversals.
3. The Rotation Between the Long and Short Market A prominent feature of market makers' strategy is the flexibility to switch between long and short positions. Whenever the market shows signs of being overloaded on one side (either long or short), they will 'turn the tables' and move in the opposite direction. This not only helps them control market trends but also creates short-term price fluctuations that only keen traders can spot. When long orders surge: The market is prone to be triggered by strong sell orders, thereby creating conditions for the 'clean sweep' long order strategy. When short orders surge: Sudden reversal with continuous buying pressure will cause continuous liquidation of short orders, creating opportunities for harmful 'short squeezes'.
4. The Role of the Liquidation Map (Liquidation Map) An useful tool in identifying the actions of market makers is the liquidation map - a type of chart displaying the price levels at which automatic trading orders are triggered for liquidation. By observing this map, traders can identify the "hot zones" where market makers are expected to make sudden moves. Strengths of the liquidation map: Help to early detect areas with a large accumulation of temporary order quantities. Show points with the potential for 'liquidation cascade' (a series of consecutive liquidations), thereby warning the risks for existing positions. Practical application: Traders can use information from the liquidation map to adjust their trading strategies, limit risks, and capitalize on market reversals.
5. Advice for Investors

In the context of market makers constantly changing the market landscape in unpredictable ways, equipping oneself with knowledge and technical analysis tools becomes extremely important. Here are some suggestions for traders: Always monitor the liquidation map: This is an effective tool to identify early warning signs of reversal. Risk management: Use leverage cautiously and set reasonable stop loss levels to protect capital. Understand market psychology: Understanding the actions of market makers helps investors identify 'traps' and avoid common pitfalls. Continuous training: The market is always changing, so updating knowledge and trading strategies is necessary for survival and growth. Conclusion The strategy of market makers is not only a psychological game but also the art of controlling the market. From 'cleaning up' long orders to hunting down short orders, every move is carefully calculated to create maximum advantage. For traders, understanding these strategies and equipping themselves with accurate analysis tools will help minimize risks and effectively seize trading opportunities. Always vigilant, sharp, and never overlook any signs on the liquidation map - that is the key to winning in this volatile market.