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You may have noticed that sometimes there is a sharp rise or decline in specific stocks' price. Though it might happen due to other reasons as well, there are chances that they are "operator-driven". In other words, the prices of those specific stocks have been moved or influenced by the stock marketoperators.Who are the Stock Market Operators?Several brokers, speculators, different types of firms, or sometimes even company persons may work together as a syndicate to move a stock price for their personal agenda or profits. This syndicate, also referred to as the stock market operators, work together to rapidly move stock prices, creating a frenzy among the investors.This is mostly done to leverage the sharp price difference created in the short run, thus generating higher profits for themselves. The target is generally small and mid-cap stocks since it is easier to influence them.
Strategies to Influence Investor’s decision
Order Book Manipulations
An order book lists different buying and selling orders for a specific stock. It shows the number of stocks in the market that people are willing to buy and sell at different prices. Order books are available in electronic mode and accessible to traders around the world. The retail investors can access the next 5 data points, whereas the stock market operators may access much more than that.As the retail investor know only the details for the next 5 orders, they are not aware of the total number of orders against the complete buy and sell quantity. If this information is available to them, they can easily figure out that stock operators have placed false orders.But since they cannot find out whether all the buyers and sellers in the market are real, it is leveraged by the stock market operators in influencing the stock prices. The operators generally place huge buy/sell orders to kick or lower the prices.
Intraday Trading Tricks
Intraday trading is buying and selling of stocks within a single trading day to earn profits by taking advantage of the price movements. The orders are squared off by the end of the day and hence the name intraday trading. A volatile stock market is a suitable place for such a kind of trade.The stock market operators tend to temporarily influence the price by trading in bulk and leveraging it by the end of the day by squaring off their position. For example, assume that the operators start selling their stock during mid-day, which, in turn, lowers the stock prices. It will create a panic situation among the retail investors who also start selling their stocks to prevent further losses.At the same time, the stock operators are buying those stocks through Algo trading at lower prices. If the stock operators start rebuying stocks towards the end of the day to make the prices shoot up, they can eventually make considerable profits in a single day.Trading tricks adopted by stock market operators are complex and difficult to understand for a simple retail investor. But if you can make out any involvement of operators in a particular stock, it is recommended to refrain yourself from investing in it. Use tools in your arsenal, such as stop-loss, to ensure you get out of the trade before the trade goes below the minimum level.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
