What are shakeouts and market control?

Shakeout is commonly referred to as 'shakeout' in the professional terminology of traders.

It refers to the behavior of major funds in the market that deliberately create price fluctuations or panic to force weak-handed short-term investors and retail traders to sell their positions, thereby absorbing chips at relatively low levels, clearing floating chips, and reducing selling pressure for subsequent rises. Common methods include rapidly suppressing prices, creating the illusion of technical breakdowns, or causing severe fluctuations near key price levels.

Market control, in the professional terminology of traders, is most directly referred to as 'market manipulation,' but this typically specifically refers to manipulative behavior that is fraudulent or illegal in nature.

In a broader and more descriptive context, traders express this in the following ways:

Controlling the price action / Dominating the order flow

This refers to a specific market participant or a group of participants whose large capital and order size can significantly influence or even temporarily determine the price direction and trading rhythm of the underlying asset.

Defending a price level (e.g., defending the 50-day moving average)

This is done by placing a large number of buy or sell orders at key price levels (such as technical support levels or round numbers) to actively prevent prices from breaking through in an unfavorable direction.

Core objectives and methods:

The main purpose of market control is to make price movements align with the strategic intentions of major funds (such as lifting, suppressing, or locking within a range). Common techniques include: piling up huge orders in the buy/sell order book to create pressure or support illusions, wash trading to create false trading volume, and controlling price breakthroughs at key moments.

Important distinctions:

Legal influence: Large institutions have a 'controlling' impact on the market simply due to their size; this is the norm in market operations.

Illegal manipulation: Deceptive 'market manipulation' aimed at inducing other traders is explicitly prohibited by regulatory agencies in various countries.

Therefore, 'shakeout' is often a specific tactic employed during the 'market control' process to clear floating chips.