What is Market Manipulation?
Market manipulation has existed for as long as there have been markets. Professionals use volume to inflate or deflate the price of a security for personal gain. This is called market manipulation or market merchandising. It is constantly carried on throughout the world markets.
Those who control the markets for their personal gain have a vested interest in keeping it that way. These people used to be called market makers or specialists, but the modern term is ‘professionals’.
Examples of Market Manipulation
Example #1
If a trader has a large position in a stock they would like to sell, they show a strong buy interest in the financial instrument by raising price. Amateurs see the rising price and some of them get inspired to buy the instrument causing prices to rise, and the person with the large position is able to sell it at higher prices.
Example #2
Another way is releasing stories with news outlets or social media to quickly and widely disseminate particular news about the stock. News stories about stock prices lead to prices falling immediately, and vice versa. This is because the public causally responds to disseminated stories.
Bad news is usually the perfect cue for the professionals to buy stock, since the prices tend to fall. So, in the long run, bad news may lead to rising prices, while good news may lead to falling prices. Professionals’ alibi of the day to buy on bad news and sell on good news is that the news has already been factored into the price.
How to Take Advantage of Market Manipulation?
It is easy to get frustrated by instances of market manipulation. You may feel that the game is rigged against you. And it is. Which is a good thing! It allows for pattern recognition – the ways professionals manipulate price. Recognize the pattern. Duplicate the action – trade the financial instrument accordingly. Buy when pros buy, and sell when pros sell. Pros buy on falling prices and sell on rising prices. Make extraordinary profits!
The charts never lie, for they respond to cause and effect. It is very logical and possible to anticipate the direction that the market will take when you know your charts and the patterns.
At the end of the day, the most crucial skill you can learn in trading is spotting when insiders are buying and selling for themselves. The professionals leave footprints, follow them.
Your Next Step in Mastering the Markets
Professionals exercise control over price, which leads volume. Many people are not aware that the market doesn’t move based on actual financial influences, but is manipulated so professional traders can buy and sell their inventory at the expense of the public.
So it is true, the market is rigged… but that is a good thing. As this article demonstrates, this is an opportunity for you to identify and recognize the patterns to succeed.
If you liked what you read here, you will love my book, The Definitive Guide to Price and Volume. In it, I go into far greater detail about how professionals separate amateurs from their money and how to piggyback the manipulators and get professional results!
You can purchase the guide by using this link. I also offer a Prosperity Trading Course for those interested in successfully mastering any market. It is a convenient Go-At-Your-Own-Pace Course consisting of ten modules with incredible ROI that pays off for life!
