Stock market is a place where traders can buy / sell stocks at desired price. On the surface, it looks fair but the truth is, especially in Malaysia, manipulation often takes place.
Refer back to our articles earlier mentioning about "Zero Sum Game", our profit is at somebody else's cost and our losses will eventually become somebody else's profit.
Therefore, there are these people - SHARKS, they profit by misleading people to make losses.
Below I have sort out some common habits that will lead to getting trapped:
1. Buying on News
It is very dangerous to buy in a stock especially when you read/watch good news about a company on media. Why?
Imagine that you have the highest authority in a corporate, if the company is to have a good news (New mega projects, Improved profits...etc.), you shall be the FIRST one to know right? the question is, if you already know that your company is doing well, will you buy your own shares ahead of the news? (Although BY RIGHT you shouldn't, but I know you will find a way, right?)
Then, along with you, I believe your friends, family, colleagues... shall buy also right? And I believe it should not be in little amount.
Let's put this aside, what really bad about buying on news is, as a news reader, we are actually the End User. By the time the news reaches us, many informed parties could actually buy ahead of us. Think again, when the news is published, the stock price normally has went up high and if we buy, that's the best time for those who buy earlier to unload to us.
That is why we normally see price drops despite having good news.
2. Following Public Buy Calls
Do you buy a stock by following FREE BUY CALLS from internet? Nowadays, along with the advance of technology, we can get infos easily online. However, this convenience also allow the "SHARKS" to circulate misleading information.
If you have joined any Free Groups or Forums before, you will realize that sometimes there are buying recommendations that perform but some actually goes another way round.
Of course we do not deny there will be some bloggers who are genuine to share their thought but we have to know also, due to the Free features and human nature, the SHARKS could also spread their "info" free also.
This phenomenon is getting more serious even Bursa Malaysia came out with a circular to warn on this issue. Always REMEMBER, we are responsible for our own trades, DO NOT expect stranger to give you FREE money.
3. Buying on Morning Trading Session
Another dangerous behavior is to buy in stocks during morning trading session. Based on experience and observation, most of the time when market is good, it usually rally during morning opening for about half to one hour. But then it will start to idle and then fluctuate in a range until the last two hours towards market closing.
Why we have to avoid buying during morning trading session? Retailers normally are more "HOT" during morning trading session especially when market just open and tend to rush into buying. And then when the price start idling, the emotion cool down and then will tend to hold.
The SHARKS surely understand this behavior and will definitely take advantage on this. Avoid buying during morning trading session especially if you are looking for faster trades.
In conclusion, your ability to judge and analyse is crucial. Do your analysis and judge yourself whether the news or buy calls are genuine. React accordingly by then based on your own studies.
Happy trading and good luck - Vincent Eng
http://www.javestock.com/2017/04/21/never-fooled-by-sharks-again-in-stock-market/
