How to avoid algorithmic stock market manipulation
India has been rocked by a slew of market manipulation allegations by companies like Nasdaq and the NASDAQ exchange.
Here’s how to avoid these kinds of scams and protect yourself from them.
What is algorithmic market manipulation?
An algorithmic manipulation is an algorithmic price discovery mechanism in which traders use computer algorithms to guess the price of a stock.
The algorithm then follows a predetermined path through the market.
These algorithms then manipulate the market and the price in order to artificially increase the price.
Traders who buy or sell stocks using this mechanism are taking advantage of the arbitrageability of algorithmic trades.
For example, the algorithm could decide to buy the shares of a company based on the price at which it’s trading, rather than the actual price.
This is known as a “short squeeze” and can be exploited by unscrupulous traders.
This type of manipulation has been reported across India, and a number of Indian companies have been caught up in the process.
How do I avoid it?
Trading is inherently risky.
In order to avoid manipulation, traders need to make a clear decision on when to buy and sell their shares.
The first step is to find a company with a track record of good trading performance, which should be easy to find.
This will be an easy step, as a lot of Indian startups have been offering algorithmic strategies to their customers for years.
For instance, Anil Dhawan, the founder of Akshaya Group, has been offering a short squeeze strategy for over a decade.
His company has over a million users on its platform, and the strategy has been a success.
But for traders, it’s a tricky business to figure out how to implement this strategy.
The algorithm may make a mistake, and if that happens, it could lead to an out-of-control trading session.
Trading strategies are also very risky if the company that the algorithm is using has not been publicly traded.
Trading strategies are usually based on price-to-earnings ratios (P/E), which are the ratio of the price to earnings of the stock.
For instance, if the P/E of a biotech company is 10, the company’s P/Es are around 9.5.
Trader must make sure that the company with the best P/e has a track history of good performance.
The most important factors in the performance of a trading strategy are the trading volumes and the ratio between the price and the P&E.
If these are not present, the strategy may be manipulated.
For example, Anand Kumar, who is one of the founders of the company Harshil, is known for a trading tactic of “short squeezes”.
This strategy has seen huge success in India.
In 2016, Harshila had $1.5 billion in revenues.
In 2017, the platform had a market cap of over $3.6 billion.
Harshile has been running its algorithmic strategy for more than two decades, and it is well-known among Indian investors.
But trading algorithms are not limited to Indian companies.
Indian markets are also plagued with other forms of manipulation, including the infamous “short sale” or the “shill stock”, which are often used to raise money by buying shares that are being sold for less than what the company is worth.
These strategies often take advantage of short sellers and the fact that most of them are not well-respected.
This could lead them to be bought and sold.
It is a very risky strategy to use and there is no guarantee that your trades will be spot-on.
Trades can also be manipulated by using algorithms to determine the price or volume of a certain company, or by buying or selling stocks based on other people’s expectations.
These strategies can also distort the market in a way that can make it seem that the market is overvalued, as happened in the case of Aashik Jain, the co-founder of Anil Dhanjogar Associates, an investment firm that had been running a stock-buying strategy for several years.
Jain was caught out by an algorithmusical short squeeze in 2016, which led to him selling the company for less and then using the proceeds to buy shares of another company, which ended up taking a substantial amount of his money.
The trading strategy was used to generate huge profits for Jain.
The problem with this kind of trading strategy is that the algorithms used in this strategy may not be as well-tested or as transparent as those used in other trading strategies.
Tracking down the person behind these manipulative strategies can be a daunting task.
Traders will also want to be able to prove that they have followed a strategy, or that they haven’t bought or sold the wrong company, before they can get back to trading.
Traded stocks may not always be the best investments.
For this reason, it is important to look at a company’s actual business.
If the company has a good track record and is performing well, then it may not make the best investment