RE: Gdxj17 Dec 2024 10:13
Good article..
Is market manipulation illegal?
There are many forms of market manipulation, and these known forms are illegal. Unfortunately, new forms of manipulation do sometimes occur, especially as new technologies and markets emerge. An example of this is the attempt to spread false information or post fake orders, artificially inflating or deflating digital currency prices, which most countries have not yet developed laws around.
Many traders equate their own losses to market manipulation. While this may sometimes be the case, often it is not. Markets move up and down, and the trader may just be competing against much better traders. Here’s an example that is not illegal, but that some traders may complain about.
Trader A buys shares in Company XYZ, and immediately after, a Big Trader starts selling their shares for a profit. Trader A sells their stock at a loss. The Big Trader watches the price decline and decides that it is time to start buying again. They sweep up all the shares, pushing the price back up. Other traders jump on board, pushing it up even more. Trader A thinks that the stock is going to keep rising this time, so they buy again. Shortly after, the Big Trader, having made a sufficient profit, begins to sell their shares again. The price falls and Trader A sells at a loss again. Trader A may claim that the market is manipulated.
While someone did get better entries and exits than Trader A, there is no illegal process involved, as the pair are shorting stocks within the share market. The Big Trader wanted to buy and sell legitimately, and so did Trader A, whereas illegal manipulation typically equates to false information or something artificial being made to appear real.
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