In this article I will talk about the market manipulation. Market manipulation is about an artificial or a fake picture of the market which confuses the traders and the investors and as a result they make wrong estimations and trades. It’s about an artificial supply and demand. Here’s an example”
I think that many of you have a question like “How the market is moving?”. Well two reasons can move the market. One of them is the news. Good news can cause a rise in the market and bad news can a cause a fall in the market.This is logical because the investors have emotions and the most of the time they follow them. The other reason which can move a market is the market manipulation. Who can create a market manipulation? Of course the bigger investors because they have large liquidity. They can create a false picture of the market by buying or selling heavily and this situation can easily confuse the traders because they are buying in a big rise and they are selling in a big fall of the market. This situation is a usual phenomenon in stocks, especially in penny stocks but it’s the same thing many times for forex,too.
A well known market manipulation is the “pump and dump”. The big investors drive the price in very high levels and after that they can sell from there with a big profit finally. On the other hand the big investors drive they price in very low levels and after that they can buy from there with a big profit,too. Let’s see a chart.
This chart is from EURUSD currency pair. Notice the blue rectangle. We have a possible Pump and Dump. The yellow horizontal lines are whole numbers which are physical support and resistance levels many times.Notice the mad increasing volume below the rectangle. The market is moving side ways for some minutes and suddenly we have a very strong increasing volume with many green climax bars. This means that someone buying heavily without an important reason. Then in the last whole number we have a very big red candle with much volume without reason in this rising market. This means that is time for the big investors to sell from the highs and making a good profit. Traders who bought in the highs are out of the game now.You should always be careful in a situation like this.