Understanding What Is Operator In Stock Market: You may have observed that the price of certain securities rises or falls dramatically from time to time.
Although that could happen for a range of factors, there is a possibility they are operator driven. In other words, stock market operators have manipulated or impacted the price of that individual security.
In this article, we will discuss what is operator in stock market are and the various methods used by stock operators to manipulate a stock.
Who Are Stock Market Operators?
Stock market operators are those who tend to artificially boost volumes in stocks by trading in circles and raising the price of these securities. This exercise continues until volume increases and the price rises tremendously.
When the general public starts purchasing these stocks right away in the hopes of making quick money. The manipulators sell their stocks to the general public, which causes the stock to fall.
When panic rushes in, the public wants to sell their stocks but there are no buyers, and the operators profit handsomely. Small-cap and Penny stocks are the primary targets since they are easier to manipulate.
Stock Market Operators – How They Influence Your Decision
1. Order Book
An order book keeps track of ongoing orders for a certain stock. It demonstrates the number of stocks in the equity market that people are ready to buy and sell at various prices.
Order books are published in digital form and can be accessed by traders all around the world. The standing volumes at the next 5-20 prices (market depth) are available to regular investors, while stock market operators have access to considerably more information.
(Example: Market Depth of stock on Zerodha)
The retail investor is unaware of the overall number of orders against the whole buy-and-sell quantities because they only have the specifics for the next 5 to 20 price points. If they have this data they may quickly determine whether stock operators have made fake orders.
However, because they are unable to determine whether all of the buyers and sellers in the market are genuine, stock market operators use it to manipulate stock prices. To raise or decrease prices, the operator in the share market typically places large buy/sell orders.
2. Intraday Trading Approaches
Intraday trading is the process of purchasing and selling stocks inside a single trading day in order to profit from price fluctuations.
Intraday trading is named after the fact that orders are squared off by the end of the day. A volatile stock market is a perfect scenario for this type of trade.
The stock market operators attempt to affect the price briefly by trading in mass and leveraging it by squaring off their position at the end of the day.
Suppose that the operators begin selling their shares in the middle of the day lowering the stock values. It will cause panic among regular investors who will begin selling their equities in order to avoid more losses.
At the same moment, operators are acquiring those shares at reduced prices via algo trading from stock exchanges. Stock operators can make significant profits in a single day if they start repurchasing shares near the end of the day causing prices to skyrocket.
For a typical retail investor, the trading strategies used by stock market operators are complicated and hard to interpret. However, if you notice any operator engagement in a specific stock, it is suggested that you avoid investing in it.
In this article, we understood what is operator in stock market and how they influence your decision. It is impossible to completely avoid the risk of operators in the security markets.
However, use stop-loss orders and other techniques in your toolbox to guarantee you exit a trade before it falls below the minimum price.
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