Cramer once said very few people or firms have been convicted of market manipulation in the financial markets. what does Cramer, bernie madoff,clinton, obama have all in common? All 4 are trained 'lawyers' by training. Now what is market manipulation? In the real market, price fixing, market colllusino, oligopoly, monopoly or shill bidding is illegal. ie. ---scalping is illegal too---. some one once told me he was charged trying to corner a market for certain product or service.and had to go to court in the 70's Theoretically, scalping tickets for concerts is 'illegal' but it's never enforced. putting fake bids and sell orders is illegal. Like shill bidding in auctions is illegal. Making defamatory press in the media or creating bad press to destroy price etc. is illegal. market manipulation is more prevalent than before since it's can no longer be Enforced..sherman act and market manipulation laws are toothless or not worth the paper it's writtened on is weakened by political corruption, legal corruption, lobbying by special interest groups etc.. market manipulation laws is like pot laws...everybody does it even if it's illegal. the punishment or fine for breaking market manipulation or pot laws is just cost of doing business. and is not seen as SERIOUS CRIMES. free markets means free from the above.
Scat. That's too simple. Some forms of manipulation are illegal and others are not. For example, it is perfectly legal to manipulate prices by buying and selling in the market. This is done every day, but of course those with limited access to capital have little chance of moving prices through their buying and selling. The easiest time to manipulate price legally is when trading volume is low, lunch hour or in the overnight session before about 3 am EST. Probably the most common form of legal price manipulation is the issuing of buy and sell opinions. This is a preferred method used by Wall Street Banks and Brokers and media personalities who, one supposes unwittingly, do their bidding. Still another form of legal market manipulation is practiced by the Federal Reserve Bank. By lowering short term interest rates or expanding the money supply or liquidity by buying bonds, the market can be pushed up; by raising short term rates or selling bonds the market can be pushed down. Changing margin rates can also be legally used to influence market direction.
Place a 10.000 lot market order in Mini S&P`s and you will experience what "market manipulation" actually means...
Yes, it will barely move the market for 2 sec. However, you can manipulate individual stocks with a combination of capital and tailor made news. Wheter it is legal or not depends on the law. If there's no law it's not illegal, for example : Forex, Bonds, CDS, spot commodities. It's almost legal for everything but equities, equity options and equity futures. For FX, there's no exchange, just a network of banks who trade OTC so it means no jurisdiction.
Market manipulation only really occurs in products which are thin enough to be easily manipulated by a fairly large local or fund etc. I used to trade the Mini Dow and that could be easily pushed around by a set of big individuals. So I went to the E-Mini SP 500 and I find it very very difficult to believe ANYONE can manipulate that contract. Someone mentioned 10,000 lots .... so what it trades about 50,000 lots at each quarter tick, that's like saying me taking a piss in the pacific ocean caused the tsunami. Gravitate towards products with SIZE ladies and gents, because you just can't manipulate them, sure I might get spoofed out of a position now and again, but who cares the next time the same guy will help me and how far did he push it ? a quarter of a tick??? big time manipulation eh. You CANT manipulate SP, T-Note, BUND, EuroStoxx, you'd need the trading limit of a government to do so, so trade them if your paranoid. Now, the latency inducing order stuffing HFT's, well that's a different story, one that requires castrating of their order stuffing as well as their .........
No market order is manipulation whether that be 1 lot 10,000 lots or 500,000 lots as you are trading into the market, which is what we all do many times a day. If that's manipulations then I'm afraid we are all guilty of mass manipulation daily. A 10,000 lot resting order doesn't bother me none, the E Mini will eat that up no problem. And what if he pulls it, is it proof he didn't want it? or do you expect him to leave his 10,000 lot order there for all the HFT and yourself to front run whilst he doesn't get filled. Don't get me wrong I play the same game as you buying/selling in front of what I think are genuine big orders, BUT I'm not gonna throw my toys out of the pram if he pulls it, cuz if it is genuine don't you think it's slightly annoying for the guy trying to buy 10,000.
If anyone should be convicted of manipulation is that's jacka zz Cramer himself. He described the sell off in 08 as more than a normal sell off and was accusing financial terrorists of causing it. I.E. he was implying that anyone making money on the sell side was profiting and working in kind with Al Qaeda to destroy the US economy?!?!? Sorry Cramer for not being a half wit like all the so called Gurus and superstar hedge fund managers that were caught long and actually knowing the market was overvalued. Cramer is a very dangerous man to pay any attention to if you value your wealth.