Market Manipulation is the artificial inflation or deflation of a share's price on the financial market, for personal financial gain.
The practice of market manipulation has become easier and more prevalent with the emergence of social media.
The fragmentation of social media has made it even harder to track down and prosecute market manipulation practices. It's also hard to prove market manipulation by its strict definition
Penny stocks are most vulnerable to market manipulation
Some signs of market manipulation: 🚩🚩🚩
- Unsolicited recommendations or promotion of certain shares
- Unexplained changes in stock price or trading volumes
- No real business operations
So whenever someone punts a certain stock, tread with caution
- Avoid falling victim to FOMO
- Use the information provided as a cue to do more research, rather than something to act on
- Approach the research with an unbiased lens
Some techniques of market manipulation:
- Pump & Dump: instigator buy the shares, and sells them for a profit once the price has gone up significantly
- Poop & Scoop: instigator buys the shares after the price has fallen significantly
In closing, remember:
“Facts only account for 10% of the reactions on the stock market; everything else is psychology.”
This post was originally published in August 2021
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