who are these operators? and how to identify such stocks?
Market operator activity is a teamwork between different individuals or different investment institutions conspiring and working together to inflate or deflate the value of a stock.
Market operators does this:
- For Themselves :
They identify a stock that has a large promoter / family holding and less public participation. These kind of shares lie idle without much activity. The operators now start buying and selling this stock between themselves. Creating supply, demand and liquidity also increase in the ask and bid prices. Once this activity continues for a few days, the technical indicator values of these stocks start to show up in the radar of the retail investors who are looking for a quick buck.
The inexperienced retail investor now been trapped into thinking this as a good opportunity, gets a loan, sells the gold, mortgages the house and invests all his fortune on this rubbish. The operators now dump all their holdings to the new comers. Once the operators clear the scene there are no more buyer for these stocks.
- On behalf of Company themselves:
X is the promoter of a public listed company. X’s company is unknown to the public and not many people are buying X’s company shares. X’s share value has not increased in a few years. X now approaches Market Operators and seeks their help to create a stock momentum activity. The operators now start buying and selling this stock between themselves. Creating supply, demand and liquidity also inflating the value of X’s shares. Once this activity continues for a few days, the technical indicator values of these stocks start to show up in the radar of the retail investors and investment institutions.
As an investor , you need to identify such operator activities on stocks and stay away from falling for the TRAP.
Look into longer time frames like a 5 year chart before making an investment decision.