I was asked a question recently about what causes markets to correct so violently. While the answer to this question is obvious to all seasoned traders, I thought I’d spend a few minutes answering it for those who are relatively new to this arena.
There are several reasons, but there are a few that stand out as the most compelling. The first is paper profits. At the start of every major bull move there are many people who bought early. As the markets reward them for their buying decision they are increasingly happy (of course). But they understand that their ‘profits’ are only on paper until they sell. They realize that if the market falls back to where it began, their windfall will be gone, if not reversed to a loss. It puts them in a conundrum because they all want to sell the top, but where is the top? Every trader has an ever-increasing anxiety as their position grows in value. With each uptick they have more to lose. Everyone wants to be the first to sell, but they don’t want to panic and sell too soon. It is nerve-wracking. Those who were long Ripple last night were in this
Read more ... source: CryptoCoinsNews
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