A question for Pro-Traders!

[Flashift]

Hey guys, 🙋‍♂️

We all know the textbook rule about CVD divergence: When aggressive market selling is hammering the bids, but the price refuses to drop, it means passive limit orders are absorbing the sell pressure. Usually, this is a bullish signal of whale accumulation.

But here is my practical challenge:
How do you mathematically or visually differentiate between genuine long-term absorption, and a temporary "Whale Trap"?

You know, when a whale puts up a fake limit wall just to induce early retail longs, only to pull the bid 5 minutes later and flush the price down to grab liquidity?

What is your specific confirmation trigger to know the absorption is real and not a spoof?

[RGBTC]

a temporary "Whale Trap"?

You mean liquidity trap? I simply pay attention to how long it takes for a large order to be placed. Usually it disappears before it is touched or the market price approaches the price at which the limit wall order was placed. Usually spoofing actions are placed at price levels that are not zones that are often retested (not a valid SnD zone).

[fighter2627]

Well, to be honest I'm not a pro-trader, I only know a little about trading but not enough to say I'm an expert, I'm very far from that level. Regarding your question op, I think that in the part and experience I do in actual trade, I just put in a position when I see a confirmation that I need to step in.

Aside from this things pull back method is one of the good things is giving me an opportunity to obtain sometimes in terms of earnings. And so far so good while I am doing this things anyway.

[PostQuantumBTC]

But here is my practical challenge:
How do you mathematically or visually differentiate between genuine long-term absorption, and a temporary "Whale Trap"?

You know, when a whale puts up a fake limit wall just to induce early retail longs, only to pull the bid 5 minutes later and flush the price down to grab liquidity?

What is your specific confirmation trigger to know the absorption is real and not a spoof?

It is not easy to know but you will just need to try your luck but by using the money that you can afford to lose. What I have noticed is that there can be increased trading volume and the price action is noticed on a particular coin, but within few minutes or hours, the price of the coin that is going up before will suddenly crash and the trading volume will fall back.

Even the market that the whales are really dominating, the price action is not in a way that the price will just be going up, you will see whales sell and buy again. You may think the whales are dumping the coin but later buying it again. You can see what happened to the coin called BANK few days ago. I thought the coin has increased 10x already, the price dropped and later  the whales took it up again and it later went up more than 20x.

The best one that I know if to just buy bitcoin and just wait for the bull run.

[crwth]

First, you have to know that there are a lot of tools that could be used in trading, and they could be automated and put orders that make it look like there would be an order.

There might be different volumes involved, like taking into account the actual fulfilled volume and just the displayed volume. There are probably traders or bots whose goal is to somewhat spoof the orders and make it so that there is just one direction for it.

More on executed volume for me.

[Dr.Bitcoin_Strange]

What is your specific confirmation trigger to know the absorption is real and not a spoof?

It's not all the time that retail traders are able to get it right and differentiate between real long-term absorption and a fake-out (whale trap), but depending on the strategy the trader is using, he or she may have their personal confluences that give them extra confirmation of whether the sell-off is going to happen or whether the whales absorbing the sell orders will continue to go long.

Since my strategy revolves around supply and demand, my confirmation comes from using different time frames (top-down analysis). I have to mark the key supply zones on the chart, usually from a higher time frame like the weekly, daily, or 4-hour chart. After marking a key supply zone on the 4-hour chart, I will then go to the 1-hour chart and wait for the price to come there, which is where most retailers will start placing their sell orders. I won't place any orders unless I have seen a market structure shift, then I will place my order once there's a pull back before the first break of structure.

I'm not saying this works all the time, but it has been working for me, and I still use it.



A trade I took last week using the confirmation method

[Charles-Tim]

It's not all the time that retail traders are able to get it right and differentiate between real long-term absorption and a fake-out (whale trap), but depending on the strategy the trader is using, he or she may have their personal confluences that give them extra confirmation of whether the sell-off is going to happen or whether the whales absorbing the sell orders will continue to go long.

You are discussing about XRP, but that is very better, but not better like bitcoin. There are many altcoins that are pumped daily and the whales can dump them at any time during the day. What I think about this is that traders should play very safe in a way that most of their trading assets will still remain after huge volatility, but most traders are not like this because they want to make huge amount of money from trading in just a short period of time.