Hey, Please don’t play with the operators based stocks. Its better to stay away from these influenced stocks. Why so? Let’s learn more into detail about operators in stock market and how they play with our hard earned money.
The stock market is a fascinating aspect. Many men have tried to predict what affects it and further statistics about how it works. This makes the stock market more interesting where millions of investors come to try their fortune.
Many people flock here to learn how stock markets work and what makes them so charming. It is so magnetic that it attracts millions of people, and offers an opportunity to become wealthy and earn more money.
Let’s have a glance at a vital aspect of the stock market about how operators function and how they influence the stock market.
What are the Stock Market Operators?
You must have noticed a sudden hype in the stocks of a particular company, these sudden increments are operators driven. Other aspects also influence hikes in stock prices, however many times it occurs due to operators.
The stock operators boost volumes and thus the price of these securities goes high. Its a stock operator tricks. They continue to carry on this process until and unless the volumes and price go up to a great extent.
With the expectation of making more money, people start purchasing these stocks. However, after a certain period, people know the truth and by that time manipulators sell all their stocks to the general public.
By this time all the stocks fall. But this time people want to sell their stocks. However, there are no buyers and operators benefit heavily. In this way the operators target small-cap and penny stocks. Due to this illiquidity in the stock people are struck in the game and not able to exit at that time.
How do stock market operators impact your funds?
Here are the three factors in how the stock market affects your decision.
Order book
The order book maintains the record of the current orders for a particular stock. It represents the available number of stocks in the equity market that the general public wants to buy or sell. Order books are available in a digital format and all the traders of the planet can have access to them.
Generally, stock market operators have more information in comparison to regular investors. Regular investors normally have information about the volume levels of the next 5-20 prices.
The retail sellers can estimate only the price of the next 5 to 20 points. Thus, they cannot predict an overall number of orders out of the entire buy-and-sell quantity. If they get this data they can estimate that these orders are operator driven and they have made false orders to raise volumes.
Hence they cannot determine whether the buyers and sellers in the market are genuine or not. To raise or decrease the prices the stock market operators place the order in huge quantities.
Intraday Trading approaches
The intraday trading approach is a method in which all the stocks are purchased and sold in a single trading day. This helps to make a profit from the price changes. We are aware of the fact that the orders are squared off when the day ends. You must catch big moves by stock operators using data analysis.
This is the reason why the name is the intraday trading approach. The prices are largely affected by the stock market operators as they buy the product in huge quantities and then leverage it by squaring it off when the day ends.
For instance, an operator will start selling shares in the afternoon by reducing the stock values. All the regular inverters will rush into panic as the price reduces. Regular investors will try to sell the equities to avoid further losses.
At the same time, the operators begin obtaining these shares at reduced prices with the assistance of algo trading from stock exchanges. Thus stock operators can make huge profits in one day if they start acquiring the shares by the end of the day.
The price of the stock will touch the sky and thus operators make a huge profit. Thus, for a retail investor, it becomes difficult to predict the pattern of stock market operators and whether stock market operators or genuine people are engaged in it.
It is always recommended if you ever find a stock market operator engaged in any stock trading activity then try to avoid investing in that stock.
How to identify an operator-driven stock?
It is a bit difficult to identify the involvement of the operator however an investor can look at the signs which may reveal that manipulation is being made by an operator. Here you have to understand how do operators manipulate stocks. After knowing this they can stay away from investing in these stocks to avoid any kind of losses.
Sharp price variations
When there is manipulation in a particular stock you will see a sudden rise and fall in the prices of the stocks. This can be an indicator that these stocks are operator driven. Various companies, even the best companies are manipulated by the stock market operators.
Various investors fall prey to these stocks and invest in these stocks. Whenever you notice a sudden rise in the prices of a particular stock makes sure to research well before investing in those stocks.
Size of the company
Operators can easily manipulate smaller companies in comparison to the big ones. The manipulators have to target a small portion that is 1 to 2% of the stock of a particular company. The capitalization of the company must be 100 crores or less than that.
These companies have smaller market capitalization thus they are very easy to manipulate. It becomes difficult for them to target a large-cap stock thus retail investors should always try to invest in bigger and established companies. You can avoid investing in microcap or small-cap stocks.
Repeat offenders
You cannot predict any information from the history of a stock. You can’t predict whether to invest or not depending on the stock history. If you take a glance at the stock history you will understand that certain stocks are repeat offenders this means that these stocks have been targeted even on the occasion.
They use this during the bull run. Thus they attract more manipulators who don’t have enough information. Do extra research when the prices are on a hike.
No appropriate reason for a hike
Another sign of manipulation is that there is no appropriate reason behind the good performance. If a manipulator is manipulating a stock you won’t understand why it is exactly happening. It doesn’t explain prices, revenues, or price-to-earnings multiples of the stock.
Final words:
In this article, we understood the reason for an operator-driven stock and how to do stock market operators influence the stocks. This article helps us understand why it is essential to avoid manipulated stocks. It is not possible to avoid the manipulation of stock prices by the operators however by looking at the signs you can avoid investing in those stocks.
Frequently Asked Questions:
How do I find a stock Operator?
By simply follow the above mentioned tricks, you can easily detect operator driven stocks. We will try to give you the updated list of operator driven stocks very soon. Please bear with us.
What are the types of operators in stock exchange?
Listed above, are the types of operators in stock exchange. You must stay away from this these type of stock selection.
Are operators legal in the stock market?
Certainly, operators are not legal in the stock market, because they manipulate the price of the stock. Sebi take many remedial measures and strict action against them from time to time.
