How Market Makers Manipulate Retail Traders

Market makers require a substantial amount of funds to facilitate the trading activities of retail traders by placing buy and sell orders, thereby ensuring liquidity. However, there are instances when market makers themselves need liquidity to execute their own orders for profitable trading. To acquire the necessary funds, they may have to halt or liquidate a significant number of retail traders by temporarily reversing the market direction below the previous consolidation level, but rarely past the secondary major support zone.

This manipulation occurs as market makers exploit the increased liquidity that arises from stopping or liquidating these retail traders in order to secure cash for their own trades.