"On Liquidity Intermediation and Price Discovery Mechanisms"

Interestingly, prices tend to concentrate in areas richest in liquidity.
Rather than markets discovering value, markets are discovering consensus.
Support and resistance levels are both results of self-reinforcing market liquidity.
The most typical examples: the second-hand luxury goods market, real estate agents.
Pricing power belongs to liquidity providers, not to buyers or sellers, unless one side has overwhelming strength that changes the price fluctuation range.
Passive market makers are liquidity providers; they are intermediaries, placing bid-ask orders on both sides, earning from trading friction costs.
Active market makers are the dominant forces of buyers and sellers (the main players); they have directional intent, trying to change the consensus on prices, earning from the difference before and after price movements.
When active market makers are accumulating or distributing, they are acting as passive market makers:
Active market makers are not always "active"—they are active at the moment they push the price, but before (accumulating) and after (distributing), they must pretend to be passive market makers: placing orders on both sides, maintaining price stability, creating the illusion of "safety here," encouraging counterparties to hand over chips or buy from them.
This phenomenon was also summarized by Wyckoff as a behavioral pattern of the composite man: accumulating, pushing up, distributing, and declining.
Simplicity is the ultimate sophistication.
The principle behind retail traders losing money: losing patience during accumulation, gambling on the next rally during distribution, hesitating to chase during the early stage of a rally, and FOMO buying in the late stage.
Each stage corresponds to a weakness of human nature: impatience, luck, cowardice, comparison.
"I can't wait anymore" "Maybe this time is different / the same" "I'm afraid of losses" "Everyone is making money, I can't fall behind"
Abandoning analysis of phenomena, isolating inner emotions, simply observing the essence of chips and fundamental expectations—buying when prices are relatively undervalued, selling when overvalued.
Competing with others is endlessly enjoyable.
Abandon wisdom, forsake benevolence, discard cleverness for profit.
Once the matter is settled, turn and leave, hiding achievements and fame deep within.