Jacking up and hammering down of stock prices

It is claimed that the price of a stock on the stock market is the function of demand for that stock and the available supply at a given point of time, apart from the fundamental factors that come into play in the pricing of the stock. Well, investors and traders who regularly trade on the stock market may not be very convinced by the demand-supply hypothesis. The wild gyrations in the intra-day movement of some of the stocks actually point to more than just demand-supply mismatch. The villains of the piece are the market operators. The bull operators jack up the price of the stock to dizzying heights, while bear operators hammer down the price to abysmal lows. Due to this artificial price manipulation, the small investors and traders get caught on the wrong foot and suffer losses, while the bulls or the bears go laughing all their way to their (respective) banks!

So how do the bulls and bears indulge in such artificial manipulations? It is usually done through concerted circular trading wherein the members of the ‘gang’ keep buying and selling shares of a particular company to each other to jack up or pull down the price. When the price suddenly starts moving up or crashing down at a rapid pace on very low volumes and for no apparent reason, it is a sign that the operators are at work. If one can discern such artificial movement and move along with the operators, it is possible to make a killing, but if not, it is better to stay away from the stock for good. After all, it is better not to earn anything than to lose a lot!