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| Photo by m. on Unsplash |
Manipulation is a popular practice in the financial markets used by scammers for their own benefit. This, however, leaves ordinary investors moneyless. In fact, some traders end up losing thousands of dollars. Traders Union experts analyzed market manipulation schemes and prepared recommendations on how to prevent market manipulation.
Is market manipulation legal?
Financial manipulations in markets are illegal and prosecuted by law. Regulators have strict rules in place which all market players must follow. However, there are still those willing to break the rules to illegally increase their capital.It is difficult to find malicious rule breakers, but regulatory authorities introduced legal leverage against market manipulators. For example, there are federal laws on securities. The Securities and Exchange Commission and other supervisory authorities actively encourage whistle-blowers, who help them find and apprehend scammers.
Tips to avoid market manipulation
It is much easier to avoid participating in a financial scheme than to try to get your money back. Several main rules need to be followed when trading in the financial markets to keep and grow your capital:- 1. Do not react to sudden price surges. Ordinary investors, beginners in particular, often react to price pumps. These phenomena are not rare in the financial markets, where manipulators operate. In addition, you risk getting spoofed and losing a large amount in day trading. This could result in a loss of thousands of dollars within a short time.
- 2. Check sources of information before making a trading decision. Use reliable analytical and news websites to confirm information. These websites also publish comments by reputable experts and the latest information on the market situation. This will help you make timely and reasonable decisions. In addition, it is important to protect yourself against insiders. It does not matter how well you know the source of information. You need to compare the information with the information published in open sources. Often, ordinary investors make emotional decisions, following the example of acquaintances or colleagues. This could result in a loss of money.
- 3. Act according to your personal investment plan. If a person clearly follows the chosen strategy, there is a good chance of avoiding manipulation schemes (for example, Pumps and Dumps). Use only uncommitted funds to trade; their loss will not crush your budget.
