Market Manipulation? Or just Human Nature?

Extract from email received at YTC:

Hi Lance,

I know you are not a big fan of manipulation and conspiracy theories…I think you told me that once..;)

Just follow this for fun…it's the current EUR/USD 1hr chart…

market manipulation

Note: The price action off to the left of the image was trending down to this area of accumulation. I've just cut it off to fit the image.)

My thoughts…

So, is it market manipulation? Or was it in fact just the post-news volatility which followed the 0830ET US PPI economic release!  🙂

The sender of the email was right. I'm not a fan of manipulation and conspiracy theories. We'd discussed that previously via other email correspondence.

But you will see this stuff all over the internet.

More often than not it comes from people frustrated at being stopped out, ranting and raving about their broker who is running their stops.

But often as well you'll see it in a serious discussion about the nature of price movement and market structure. The concept the reader offers us in the above image comes from Wyckoff theory, which offers a way to view price action from the perspective of the professional smart money vs the amateur and less informed public. The idea is that the smart money uses the period of accumulation to buy a significant quantity of stock (or whatever is being traded). One way they achieve this is to push prices lower into the pocket of liquidity that exists where stops are located just below the ranging market. The smart money then buys as the amateurs are selling (getting stopped out). Then during the following uptrend the smart money is selling the stock back to the public who are always late to the party.

Wyckoff theory is of course much more involved than just this. I highly recommend you study it if you're interested in learning to read buying and selling pressure within the market. I actively use some concepts in my own trading. And you'll find some links to Wyckoff education on my resources page.

But is it market manipulation?

Certainly, this method of accumulating stock was quite likely a standard practice for the larger operators back in the times of Richard Wyckoff.

And maybe some manipulation occurs today as well, through broker or market maker running of stops.

But here's my problem with calling it market manipulation…

You can find the exact same occurrence in every market and on any timeframe.

So either the manipulators are everywhere, and never sleep. Or perhaps this is really just one way that human nature displays within the markets, when all the participants in that market operating across a myriad of timeframes and strategies, interact in a process of price discovery.

I'd suggest it's not so much market manipulation, but rather just human nature interacting in the markets.

Of course, this is just my belief. At the end of the day it doesn't matter how one views price action; rather what matters is whether that belief system allows them to consistently make profits or not.

And learning to recognise and exploit these traps is a great way to make profits. 

market manipulation

Lance Beggs


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