in this article I am going to show you and explain you some Pump and Dump examples of the market.I will tell you where is the best time for me to trade. I said a few things about Pump and Dump in a previous article about the market manipulation. So, let’s go to see some screen shots.
The first chart is form GBPUSD currency pair.I want you to see the behavior of the price and the behavior of the volume spread analysis indicator.In the beginning of the chart as you can see the price is moving up slowly with some small pull backs.The volume is not so strong except some spots in the pulls backs.Now, notice the price and the volume behavior in the blue rectangle.Suddenly, the volume is decreasing.There are buying climax bars (the green bars in the volume) and some selling climax bars (the red bars in the volume) which don’t allow the orice to move down.This means that someone is pushing the price up.Now notice the biggest green climax bar with the big bullish candle in the price.Someone is buying heavily without serious reason (I mean the news) to push the price in highs.The investors are preparing for a bullish market and suddenly notice how the price is moving down very very fast.This is a classic Pump and Dump.The price is going to the higs and after that someone is selling form the highs with a big reward.Potential spot for us for a put trade is the put arrow or you can make a re entry after the lower high in the chart.
This is the second chart of the day.It’s agian from GBPUSD currency pair.Look at the beginning of the blue rectangle.Someone pushing the price down.Notice the selling climax bars in the volume spread analysis indicator.Bearsish picture of the market and suddenly the price is moving up very fast.Potential spots for trades in this chart is the call arrow that I drew and after that there is a re-entry opportunity when the price makes a higher-low.
There are pump and dump in every market every day.If you can master the strategy to identify them you will have for sure an edge.Although, it’s not easy because sometimes our predictions are wrong and there is not a pump and dump and the market continue to move up or down.Discipline and good money monegement are needed in every trade you take.