Replies to post #615447 on Fannie Mae-No Politics (FNMA)

[Long Run Fun]

What Is Manipulation?
Market manipulation refers to artificially inflating or deflating the price of a security or otherwise influencing the behavior of the market for personal gain. Manipulation is illegal in most cases, but it can be difficult for regulators and other authorities to detect, such as with omnibus accounts.


Manipulation is also difficult for the manipulator as the size and number of participants in a market increases. It is much easier to manipulate the share price of smaller companies, such as penny stocks because analysts and other market participants do not watch them as closely as the medium and large-cap firms. Manipulation is variously called price manipulation, stock manipulation, and market manipulation.

KEY TAKEAWAYS
Manipulation is difficult to catch, but it's also difficult for the manipulator as the size of the market becomes larger.
Manipulation can be referred to as price, market, and stock manipulation.
Two common types of stock manipulation are pump and dump and poop and scoop.

Understanding Manipulation
Manipulation takes many forms in the markets. 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. Another example of manipulation is placing simultaneous buy and sell orders through different brokers that cancel each other out. This form of manipulation gives the perception, due to the higher volume, that there is increased interest in the security.


Two Types of Stock Manipulation
These false order techniques are often combined with the spreading of false information through online channels and message boards that other investors may frequent. The outside barrage of bad information combines with seemingly legitimate market signals to encourage traders to pile on or off a trade.

The pump and dump is the most frequently used manipulation to inflate a microcap stock artificially and then sell out, leaving later followers to hold the bag.

The opposite of the pump and dump is the less common poop and scoop. The poop and scoop method is used less because it is harder to make a legitimately good company look bad than it is to make an unknown company look amazing.