HOFV + Understanding Stock Manipulation
*** Risks To Consider: Thinly traded stocks are prime candidates for manipulation such as HOFV !
One way people can deflate the price of a security is by placing hundreds of small orders at a significantly lower price than the one at which it has been trading. Investors get the impression that there is something wrong with the company, so they sell, pushing the prices even lower
Spoofing
Spoofing, also known as layering, the tape is when sophisticated short-term investors place orders in the market with no intention of having them filled. Other investors see the large orders waiting to be executed, believing that a market whale is trying to buy or sell at a certain price. Therefore, the investor places their order at the same level to buy or sell.
Seconds before the market trades at the price of the large order, the order is pulled from the market, and the retail investor's order is filled. After the spoofer pulls the order, the market drops, resulting in losses for anyone unfortunate enough to be tricked into buying.
Avoiding short-term trading is the best way to protect yourself from spoofing manipulation. If you do short-term trading, over time you will learn what spoofing looks like, and thus be able to capture profits along with the spoofer. However, this type of trading is only for the most sophisticated and skilled investors.
Wash Trading
This tricky form of manipulation is when a big player buys and sells the same security continually and nearly instantaneously. The rapid buying and selling pumps up the volume in the stock, attracting investors who are fooled by the spiking volume. Once again, this form of manipulation does not affect long-term investors.
Bear Raiding
Bear raiding is when a large player forces share prices lower by placing large sell orders. The price plunges as stops are hit, adding to the selling.
