The Number 1 Dark truth about "Stock market" !!
The broker must have been leaking my trade information to the "Operator".
I used to be in that category of thinking as well.
Why only me, am I such a big player in the market ?
The answer obviously is “No”.
What does the "Operator" see ?
Operators know what their amount is and quantity which has been last traded. They have more money than us individually.
Suppose general retail trader consensus is based on result of “sbi” which was good and buy orders have been placed on the exchange.
What an operator will do is they will "Sell" the stock in a larger quantity to buyback at the price lower than the sale price and thus make a profit.
Big operators don't target stocks with low liquidity because of the "Buy-Sell" Price gap.
Suppose they sell “xyz” stock in 1 lakh quantity from 100 to 90 at average price of 96, to make profit they will have to buyback the stock at average price below 96 but if at 90 there are few sellers then it will increase the average buy price to above 96 and in that case, they cannot make a profit.
The fact is that operators also hire technical analysts who tell them where the "Stop-losses" could have been placed, where the retail players would tentatively attempt to "Buy or Sell" the stock.
We can also see all these things at the exchange terminal like they can but they have bigger money power to move the stock.
Below are the ways which are also applied to fool retail investors :
- Spreading a rumor.
- Partnering up with promoters of lesser known companies.
- Hitting the order-book with large sell quantity if a company posts good results.
- Triggering stop losses of retail traders.
- Pump & Dump strategy.
Does that mean operators always make money ?
The answer here also is “No”.
They face competition from other big fish like "Bigger operators & Institutions".
Bigger pocket wins the competition, as simple as that.
Why does SEBI not catch this type of activity ?
They try to, they monitor scrips. Cartels don't attack from one account. There are multiple accounts, multiple brokers, multiple proprietary firms involved when "Manipulation activity" takes place.
You have to be informed and gain knowledge about these things and learn how to avoid these traps if you want to ever become a profitable Investor/ Trader.
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Regards !!
