Market Manipulation Techniques for Beginners

[money.investment]

Market Manipulation for Beginners


General Rules


The daily volume should not be more than 20 times of the amount you are trading.

The trading coin should have some real innovation, not copy paste.

The trading coin must have passed the peak initial pump-dump phase.

The trading coin should have active developers and community.

Previous Day's Volatility |High - Low|/ High  should be less than 20 %.

In trading, for every bit of profit, some one else loses an equal amount.


Order Book
(Intended only for people who have no experience in live trading)

Understanding the Orderbook is fundamental for market manipulation. Orderbook  has two parts,
one for the people selling their coins, and other for those who are buying. Its like a race between
traders, who buys or sells first.

For instance I have 2 Primecoin (XPM), I need to convert it to BTC, and I have above order book
infront. For this I need to sell XPM.

1. Go to the Buy / Sell column.

The upper edge of the order book is the place where the main trade happens. For the sell column,
this upper edge order is the lowest price for which any one is ready to sell his coins. This is called
Ask Price.

For selling your coins instantly you need to sell at a lower price than him. Now in the above chart
the lowest selling price is 0.00025352. So you must place your sell order at any rate lesser
than it.  

2. Observe the order rate difference.

For instance you placed sell order at 0.00025351  now your order has the lowest ask. But its
likely that, seconds after placing your order someone would place an even lower order at 0.00025345.

So in order to execute your order at the earliest, you need to place your order at an competitive
difference from the edge. This competitive difference can be found by a simple look on the order
book --

Here the trading coin has 5 significant digits, so observing the last 3 digits will suffice.

The lowest sell order its 352,
the 2nd order is 718  (a difference of 366)
the 3rd order is 698  (a difference of 20)
the 4th order is 699  (a difference of 1)



From observation its clear that, you need a difference of more than 366, to discourage that trader to
modify his order, and place his order above you.

Taking a difference of 367, will require your sell order to be placed at 0.00024985.

But the highest buying offer / Bid is at 0.00025013. The difference between lowest ask and highest bid rate is
called spread.

For this case you can chose half way in between the current spread that is, (352+13)/2 = 182.5. That means placing
sell order at 0.00025183.

If the highest bid was lesser than 0.00024985, than order should  be placed at this price point.

If anyone competing with you, places order below that rate, then you have successfully manipulated the order-book
hence the market itself.

Market Depth / Spread

The image above demonstrates the spread for the market. The tiny tapering gap between the green and red areas is the spread.

X- axis - denotes the price

Y - axis denotes the volume of orders placed at the corresponding price

Green Area - Buy Orders

Red Area - Sell Orders.

The green area has steeper edge towards the spread gap, compared to the red area. This indicates that selling (execution of buy orders)
in large volume is required  lower the price.

Whereas the red area (sell orders) has flat volume requirement of  buying 930 XPM, to take  from 0.00026 to 0.00035. To achieve
target of 0.00038, around 1870 XPM should be bought.


Using Large Spread

Some coins which have low average volume, can have very large spreads. Here the given spread is 0.00025013 to 0.00025352 or 1.35 %.

If trading fees is 0.3 % of the trading volume, then this gap can be used for profit.

For example - If you manage to buy at 0.00025040 and then execute sell order at 0.00025340.

Then you made 0.59 % profit, after the trading fees. Please make sure  that, volume of trade used for this technique, is not much larger than
the average executed volume of recent trades, so that your trade doesn't disrupt the equilibrium.
 

NOTE :

1. Spread is dynamic, with every execution of order, it can change compelety.

2. Coins with lower volume, can take a while for executing even for the edge (edge of the spread) orders .

3. Spread maneuvering, is best used when the market is stable.

More to come -- Placing order on both sides, Creating Avalanche in market, and more ..

[GermanGiant]

Having 1/20th of daily volume of bitcoin is next to impossible for a normal trader. So, your process might work for some alt coin. So, this post should go under Alt coin section. Please use the bottom left button to move this post.

[odolvlobo]

Taking a difference of 367, will require your sell order to be placed at 0.00024985. If anyone
competing with you, places order below that rate, then you have successfully manipulated the order-book
hence the market itself.

There are two problems with your instructions that make me doubt your expertise.

First, if you place a sell order at 0.00024985, then you are selling below the highest bids. That doesn't make sense. You can place an order as high as 0.00025002 and it will be executed immediately.

Second, by placing a sell order, you are not manipulating the order book or the market. You are placing an order, just like everyone else.
 

[money.investment]

Having 1/20th of daily volume of bitcoin is next to impossible for a normal trader. So, your process might work for some alt coin. So, this post should go under Alt coin section. Please use the bottom left button to move this post.

Moved to alt section.

There are two problems with your instructions that make me doubt your expertise.

First, if you place a sell order at 0.00024985, then you are selling below the highest bids. That doesn't make sense. You can place an order as high as 0.00025002 and it will be executed immediately.
 

Thanks for pointing out that spread is lesser than 366. I wanted to started from the basic mechanism of trading, from the novice level.

Second, by placing a sell order, you are not manipulating the order book or the market. You are placing an order, just like everyone else.
 

Trading is like a pool, every executed order has a ripple associated with it.

[money.investment]

Market Depth / Spread

The image above demonstrates the spread for the market. The tiny tapering gap between the green and red areas is the spread.

X- axis - denotes the price

Y - axis denotes the volume of orders placed at the corresponding price

Green Area - Buy Orders

Red Area - Sell Orders.

The green area has steeper edge towards the spread gap, compared to the red area. This indicates that selling (execution of buy orders)
in large volume is required  lower the price.

Whereas the red area (sell orders) has flat volume requirement of  buying 930 XPM, to take  from 0.00026 to 0.00035. To achieve
target of 0.00038, around 1870 XPM should be bought.


Using Large Spread

Some coins which have low average volume, can have very large spreads. Here the given spread is 0.00025013 to 0.00025352 or 1.35 %.

If trading fees is 0.3 % of the trading volume, then this gap can be used for profit.

For example - If you manage to buy at 0.00025040 and then execute sell order at 0.00025340.

Then you made 0.59 % profit, after the trading fees. Please make sure  that, volume of trade used for this technique, is not much larger than
the average executed volume of recent trades, so that your trade doesn't disrupt the equilibrium.
 

NOTE :

1. Spread is dynamic, with every execution of order, it can change compelety.

2. Coins with lower volume, can take a while for executing even for the edge (edge of the spread) orders .

3. Spread maneuvering is best used when the market is stable.

More to come -- Placing order on both sides, Creating Avalanche in market, and more ..