When you are looking for a good broker to trade on and you check OctaFX review, chances are you do not expect something like market manipulation to affect your experience. All investors use the market to make some profit, therefore traders are supposed to feel safe using it. Well, there are things that can ruin the fun for investors, and one such thing is market manipulation. Despite manipulation leading to lots of consequences, including penalties, some financial firms still use it.
But what exactly is market manipulation and how can you stop it? Keep reading to find out.
What Is Market Manipulation?
Market manipulation refers to an interference with the financial markets’ free and fair operation. The purpose of market manipulation is to make misleading, fake, or artificial appearances when it comes to a commodity, security, or another instrument’s trading volume or price. If you’ve been on the stock market for a while, you are already aware that it needs constant movement in order to remain healthy. Well, there are cases when the demand and supply of securities is exploited, which leads to a change in value and price for specific stocks – this is what market manipulation does.
The way someone manipulates the market involves taking part in several transactions that exist to make it seem like a stock has a lot of activity surrounding it. It’s nothing but an illusion meant to trick excited investors into buying the stock. This gives the person or firm that began the manipulation the upper hand.
How Can You Stop Market Manipulation?
Don’t worry – even if market manipulation appears to be a situation that’s out of your control, you can do a few things to put a stop to it. Follow these tips to be able to keep yourself shielded from manipulations:
- Stay away from limited time offers or bids that are excessively large
- Before you invest into any stock, carefully study claims that appear way too good to be true
- Make sure you have an exit strategy and that you keep your risk appetite under control
- Regularly review your account and make sure to report activities that you think look suspicious
- Make sure that the broker you trade with is licensed and regulated, and that its track record looks good
- Stay up-to-date regarding any regulatory updates and market news
It can be hard to tell if a stock is being manipulated, but it’s not impossible. Be on the lookout for any signs of manipulation, such as whether a stock has an unlikely performance when compared to the indexes of the firm, whether a stock has a sudden boost in activity, and so on.
Conclusion
Market manipulation is an attempt made by people or companies that want to attract more buyers. Don’t become a victim. Always look for licensed companies and stay away from offers that seem too good to be true because most of the time, they are. Also, look for any discrepancies in your account and report them accordingly.
