Stock price manipulation tactics are applied by intelligent traders to control the price movement. Generally, trading is a game for intelligent traders.
Hence, they always try to find out the best strategies to win the battle.
In many cases, their tactics may harm general investors but victimized investors have nothing to say. However, winners are the ultimate survivor in stock market trading.
Stock trading is not for all common people. Small and common investors are always victimized by intelligent traders.
What is stock market price manipulation?
Simply, price manipulation is related to artificial increase or decrease of stock price. More specifically, manipulation is the application of tactics which are not illegal by laws.
Moreover, general investors cannot easily understand the tactics and they are the ultimate sufferer of price manipulation.
Tricky traders’ price manipulation techniques are not easy to identify. Investors, who have little ideas about stock market are the main sufferers by tricky traders.
What are the stock price manipulation tactics?
Let’s observe a table to identify the first tactic
Did you understand the matter?
In this above chart, highest buy order is at $40.5 and highest sell order is at $40.60. Normal order execution should be at $40.60 or $40.50. But manipulated order execution is at $39.50.
How does this stock price manipulation occur?
Price manipulation can be performed in two ways-increasing price or decreasing price. In this above example, this manipulation has done to decrease the price.
Mechanism of price decreasing manipulation
In this case, a trader intentionally put buying order at $39.5. later, he tried to understand the other traders’ price movement.
At one point, he put sell orders for 100 shares at $39.50. At the outset, he has put his buying order at $39.5, he has high chance to buy his own shares.
But his motive was not to buy at $39.5. His motive was to buy less than $40. He put many orders from $39.5 to $40 . Since price fall dramatically, sellers cancel sell orders and put sell orders below at $40.
Buyers also cancel their orders because they now want to buy at cheap rate. In the mean while, this tricky trader has collected his targeted shares. In this way, he could buy at cheap rate.
This tactic also applicable for selling high rate. Just think reverse trade.
Does this technique work all time?
Answer is “No”. Because all the time general traders do not fall in their trap. As these traders have huge capital, they can easily control a company’s stock price . They are very active in low cap companies.
What should you do as a small investor or trader?
Just watch the volume. In many cases, tricky traders want to make you fool by putting small amount of shares. If you have already victimized of their trap, you should use stop loss rule. Your selling styles should chance within a short time.
How can you gain from their interaction?
If you can act like them, you can gain. If they are buying side, you can gain by buying with them. On the contrary, if they are sellers, you can gain by selling.
But you have to lose if you go against them. I always try to give real examples in my writing. This above example was similar to one of my today’s trade.
Within a few minutes, my share price dropped from 40.8 to 39.5 without any reason. Some traders and broker houses manipulated uptrend market to downtrend market within a few minutes.
94 point plus index turned into 94 point minus index because of their price manipulation. When this manipulated price was executed , top buyer’s buying price was at $40.60 and top seller’s selling price was at $40.80.
All on a sudden, a trade was executed at $39.50.How it happened may miracle to many investors. I also studied the reason behind this.
This was a trap and many traders fell in this trap and lost money. As I was in selling side, I lost my 5% trading capital within few minutes.
I said many times that fear is stronger than greed in stock market. Hence, panic sell kills money from all traders and investors.
There is the second way to manipulate price
That manipulation occurs in pre-market opening . Some traders put irrelevant orders in pre-market opening to divert others to follow their trap.
Just observe the below table
I also faced this tactic in many times. Pre-market is not for trading shares. Just you can see the demand and supply of a company’s shares.
Moreover, you can understand who are going to control the market -buyers or sellers.
How does this tactic work?
As buyers see the high price list in buying side, they may fall trap by thinking that this share is going to high price. When the market open, they try to buy at high price.
But, exactly before the market open, this tricky trader has already canceled the buying orders.
Does this stock price manipulation tactic really work?
Sometimes it works very well. But an intelligent trader never put his feet in this trap.
What should you do in this situation?
Just wait and never hurry to take any decision. Wait for your moment. Take your trade on the basis of actual market movement. Try to avoid such type of abnormal trade.
Third important tactic is fake news
Fake news can divert your goal and can oblige you to take wrong decision. Try to find out technical and fundamental analysis before taking any trade.
Try to use fake news in your favor. However, you should avoid common trading mistakes. Every day, a stock market faces thousands of sentiments .
No analyst is 100% right all the time. Even, no prediction works in some cases. One trader is gainer means another trader is loser.
Take your buy sell decision more carefully. Stop loss is the golden rule to survive in trading career. Try to figure out actual market movement by watching candlestick chart .
Remember that it takes time to master in trading. Try to utilize manipulation tactics in your favor.
To Sum Up
In order to win in manipulated market, you should take decision carefully. You should apply price manipulation tactics in your favor.