Misleading orders are used for manipulating the market. They operate by opening fake buy-sell orders. Misleading orders are considered illegal in many countries, including the USA and the UK. However, general bans on misleading orders don’t have a major impact on cryptocurrencies. In this post, we will find out more about it.
Misleading Orders: All You Need To Know
What is a Misleading Order?
Every investor in the crypto money market must have heard of big money holders called “whales”. They are in a constant effort to add money to their money. The news they spread on their Twitter accounts and the claims they make through the press cause the market to be heavily manipulated. However, this type of behavior can be partially prevented or less persuasive. But in general, one of the situations that most affect the investor’s psychology is the increase or decrease in prices. One of the situations that cause the cryptocurrency supply and demand balance to change frequently is the false order. Orders are shown “as if they were given” by some algorithms or bots that are not actually placed but are used to mislead the investor.
The power of whales to influence a market cannot be underestimated. As a clear example, DOGE coin, for no reason, is a type of manipulation, when its price rises excessively as a result of a tweet by Elon Musk, although his project is also an absolutely empty project.
Manipulation is something that is done not only in cryptocurrencies, but also in all commodities, gold, silver, foreign exchange or stocks that enter the field of economics. But misleading orders are considered the most advanced method of manipulating.
What is spoofing?
Spoofing is a process done with bots and some algorithms designed. To continue with the DOGE Coin example; Bots come into play to keep the market moving excessively. These bots open large volumes of buy orders. However, orders are automatically canceled when prices approach this region. The purpose here is to direct investors to the crypto money that is given misleading orders, and unfortunately, although technical analysis training or fundamental analysis training in crypto money investment can be completed in a period of a few months, psychology guidance and strategy determination can spread over much longer periods. The biggest proof of this can be given as the rise of shitcoins without any reason to rise.
Are Misleading Orders effective?
Spoofing is a situation where good responses are generally seen. Even the most experienced trader can hardly tell whether the orders placed are real or fake. For example, Ethereum has a strong resistance at $3,430, which is normally the top region, that is, the highest place. While reading the chart, there is an expectation that Ethereum will enter a correction after this peak. However, the whales place the sell order at $4000, which causes the buying to continue. However, under normal conditions, a strong sale at $3,430 was expected, but since the market is manipulated, purchases continue.
When will the effects become lower in Spoofing?
FOMO (fear of missing out) is normally one of the most dangerous situations for individual investors. Since we are in a constantly volatile market, the perception that the opportunities to be caught are missed causes fear and the purchases continue from the top. There are also trap situations that people who want to manipulate the market sometimes involuntarily fall into. This situation can be explained as follows;
For example, Ethereum has peaked at $3,430 and someone has placed fake orders to manipulate the market. But if the fear of FOMO is too strong, fake buy orders become reality, causing the price to really go up.
How to avoid Misleading orders?
The purpose of using misleading orders is to manipulate the market and as a result cause whales to sell their cryptocurrencies at a high price. It is difficult to consistently determine spoofing, which is also considered a manipulation technique involving the arrangement of false orders, but it must be said that it is not impossible. In order to detect misleading orders, it is necessary to understand the intention behind the orders, which of course requires an in-depth analysis.
A lot of work is done in the markets to prevent misleading orders because the true value of a price is important to the market as well as to the investor. It is more beneficial for the cryptocurrency market in the long run as regulators cite market manipulation as the reason behind rejecting Bitcoin ETFs to avoid using misleading orders.
Frequently Asked Questions About Spoofing
1. Is it illegal to give false orders?
There are no decisions taken by the countries regarding the manipulation of the crypto money market by giving false orders. However, it is considered illegal to manipulate on other exchanges that are legally used in countries.
2. What is a fake order?
A fake order is the placing of a buy order above the resistance level of a cryptocurrency. The purpose of this transaction is to create FOMO in investors to ensure that investments in crypto money continue. Whales can make huge profits by doing this, while novice traders can lose their assets in an instant.
3. Can cryptocurrencies be manipulated?
Markets called bear trap or bull trap in the crypto money market are also created by giving false orders. While high-value cryptocurrencies such as Bitcoin or Ethereum are difficult to manipulate, low-value cryptocurrencies are much easier to manipulate.
How to safely trade in crypto?
Trade with a reliable platform
If you have decided to trade cryptocurrencies, you must first find a reliable platform such as bitcoin code. Cryptocurrency exchanges such as Binance, Huobit Global, KuCoin, which provide global services in addition to the crypto exchanges that serve locally in your country, are platforms that have active social media accounts, 24/7 support, and can be contacted in case of any problems. You can securely trade cryptocurrencies on these platforms.
You can’t buy cryptocurrency with borrowed money
The recent increase in the number of people who have fallen into debt swamp has led to an increase in the search for new ways to get out of this swamp. However, one of the most common mistakes in cryptocurrencies is to enter this business with borrowed money by expecting to become a millionaire in a short time.
One of the most important issues that the experts of the business constantly touch through Twitter and other social media are the warnings “do not buy crypto money with borrowed money”. Although cryptocurrencies are the fastest money making systems among today’s earnings systems, it is also an area that has the potential to sink in a short time. For this reason, investing in crypto money by borrowing or borrowing money with money that will be needed in the short term is definitely an invitation to bankruptcy.
Use Fundamental and Technical Analysis
Cryptocurrency trading is an extremely simple process. You buy by pressing the “Buy” button and you sell by pressing the “Sell” button. However, if your goal is to make a profit from the right investment, you should definitely not approach the subject in such a simple and ordinary way.
The graphs shared by the phenomena from their Twitter accounts are based on their own analysis. Therefore, there is always a margin of error. If you do not want to look for a place to blame when you lose money and do not want to be grateful to others when you win, get training in fundamental analysis and technical analysis before you start investing in crypto money, improve yourself. Most importantly, with all this training, either get a very healthy education in psychology management or trust yourself in this regard.
How are cryptocurrencies priced?
Cryptocurrencies, or in particular Bitcoin, work with the PoW (Proof of Work) algorithm, that is, with proof of work. In 2009, when the first mining started, Bitcoin was a system that rewarded miners with 50 BTC as a result of creating a block every 10 minutes. It is known that the total number of Bitcoins to be produced is 21 million, and today over 18 million of this number has been mined. According to experts, it takes until 2140 to complete 21 million BTC. This causes a “halving” event every 4 years. Halving means lowering the rewards paid per block. Today, 6.50 BTC is given for each block produced.
If you have understood the production and reward logic above, you will understand how the pricing is realized. The fewer the number of an asset in the market, the higher its pricing. Because this causes the supply-demand balance to change. The main factor in the pricing of other non-produced cryptocurrencies is the ICO, the high supply-demand balance and the process of burning coins.
The effect of speculative movements
Of course, the only factor in the pricing of cryptocurrencies is not the supply-demand balance. The fact that they are digital assets and the world’s luxury companies and the world’s richest have become a favorite investment tool affects the fact that cryptocurrencies become a target open to speculation. It is absolutely necessary to be careful about such situations.
That’s why US Treasury Secretary Janet Yellen used the phrase, “Often used for illegal financing. It’s a highly speculative asset.” The Elon Musk tweets, which have been seen almost frequently by those who are interested in cryptocurrencies recently, clearly show how prices have risen in cryptocurrencies, which are not even likely to act according to market traditions.
In such cases, the investor’s psychology should be well directed. Of course, although such upward movements are good opportunities to make a profit, not investing at the right time and buying when prices are at their peak can cause serious losses. Therefore, caution should be exercised in the face of speculation.