Fraud schemes in stock trading are not uncommon. But if at the word “fraud on the stock exchange” there is often an association with the broker’s fraud, then the fact that the investor can be deceived by another trader is, alas, overlooked. About what are the schemes of fraud on the part of man, and speech below.
How to recognize fraud schemes
In April 2015, Navinder Singh Sarao was accused of the fact that in 2010, frauds with the issuance of orders collapsed the Dow Jones index by 600 points in a few minutes. And in October 2014, the penalty for artificially inflating the futures market (spoofing) in the amount of 3.1 million dollars. The USA was awarded to Michael Caucia. Fraud schemes in overseas markets in which ordinary traders suffer are not uncommon. But we will dwell more on our markets.
1. “Hedging”. Excellent scheme for binary options, Forex works poorly due to volatility, slippage, etc. The point is this: a trader takes in trust the money of 2 investors and makes simultaneous opposite bets on one asset. Investors, of course, do not realize this, but the trust management agreement provides that in case of profit the trader gets his commission, in case of loss the client bears the risks. As a result, the trader is always in the black.
- There is no protection as such; every manager has failures that he can easily justify. Only one way out – to withdraw capital, if the manager does not justify the hopes, or trade yourself.
2. “Selling strategies.” A successful trader starts his blog by offering free and paid strategies. Firstly, the purchase of strategies and advisers is, in principle, a risky business, you can devote a separate article to this. Secondly, in 90% of cases all paid universal strategies are divorce, because the strategy cannot work universally at any time, in any market, on any asset! Below is a screen of the most blatant attempt to sell a joint strategy.
- Protection: take free strategies as a basis and adapt them to your trading style yourself. If paid strategies were so profitable, everyone would have become millionaires.
3. “Manipulation”. Traders are used to trusting the forums. And when a message appears from a long-time registered user: “There is an insider – the product will be released soon, the shares will rise” or “They will soon be bankrupt, sell urgently!” – there is panic. Prices then come back, but someone will earn on it.
- Protection: analysis of fundamental data. Reason for someone to share serious information on the forum? If, nevertheless, such information has appeared – check it on another forum.
Summary. Fraud schemes on stock exchanges are common, but they are easy to get around, if you don’t believe the “lucrative” offers and advice in various forums, blogs, etc., choose reliable brokers (a list of which you will find on the FxCash rebate service website) and only believe to your strength!