5 Market Manipulation Tactics and How to Avoid Them

You're in the financial markets, trading and investing your hard-earned money. That's exciting but also nerve-wracking due to market manipulation tactics that can impact your investments.

Let's explore five common ploys employed by unethical players. By increasing your knowledge and understanding of these tactics, you become aware of potential threats to your investments. This awareness empowers you to achieve successful outcomes.

Fake News

In our digital age, "Fake News" is a significant market manipulation tactic. Fraudsters craft or spread false information to sway stock market trends in their favour, leading investors astray. As an investor, you must exercise caution and always verify the source of your news before acting on it.

This meticulousness may seem tedious, but it can save you from falling victim to such deceitful manoeuvres.

Pump And Dump

The "Pump and Dump" is a classic scam. Here, unscrupulous traders inflate the value of stocks they own by spreading deceptive news. This surge in price entices other investors to buy these shares, further boosting their worth. However, it is important to know the risks of buying this type of stock.

Spoofing the Tape

"Spoofing the Tape" is another tactic to mislead traders. Here, manipulators create artificial activity in a stock by buying and selling shares among themselves. This high-volume trading entices others to jump on board, pushing prices up so that manipulators can cash out at higher rates.

Wash Trading

"Wash trading" is another method in the manipulation playbook. This deceptive practice involves buying and selling securities simultaneously to give a false impression of active trading, thereby inflating market prices. As an investor, avoid becoming prey by sticking with established companies that trade large volumes daily; they're less likely to fall victim to such schemes.

Bear Raiding

"Bear raiding" involves driving down a stock's price through aggressive short selling. You might not have control over such actions, but being aware of them helps. Rather than making quick decisions during sudden drops, take the time to assess the situation thoughtfully before taking action.

Remember that panicking is detrimental; stay patient and composed when handling your market investments.

Mitigating Risk Through Market Abuse Surveillance

In the complex world of financial markets, the risk of market abuse and irregular trading practices is ever-present. To navigate these challenges effectively, Securities Trading Technology offers its cutting-edge Clarity Surveillance solution. Designed to run in real-time, this alert engine is a robust defence against market abuse and irregular trading practices, bolstering confidence in investment operations and ensuring market integrity.

STT's Clarity Surveillance is a versatile tool that provides comprehensive oversight for all asset classes, spanning spot instruments and derivatives. It equips Surveillance, Compliance, and Regulatory teams with the means to analyze trading activity, whether it pertains to a specific client, broker, or an entire exchange.

So, you've navigated the choppy waters of market manipulation. With STT's clarity surveillance solution at your side, contradicting these threats becomes less daunting and more manageable in real-time scenarios.

Knowledge is power; this digital co-pilot will help smooth the nautical journey towards investment safety.