Jim Cramer, made popular through his CNBC show Mad Money, discusses manipulation in this video. With as little as $5 million from his hedge fund, Jim confesses that he was able to influence futures markets in order to make profit more easily. By creating a level of activity with the proper funding, you can drive futures in a favorable direction. Regarding manipulation tactics, Jim says, “It’s a fun game. It’s a lucrative game. You can move it up and then fade it. That often creates a very negative feel.” When you boost a market up and then the real market comes in, a negative view is created. For anyone in a hedge fund, Jim believes this is a strategy very worth doing. “It’s legal, fast and satisfying,” he says. “No one else in the world would ever admit that.” As you’re probably well aware, the U.S. experiences a major economic crash in 2008. This video of Jim was recorded in 2008. Government oversight has since increased to prevent some forms of manipulation.
At about 3:40 in the video, Jim gives an example of how a hedge trader can spread rumors in order to paint the picture they want of a specific stock. In the example, he shorts Apple (AAPL) and wants to keep the stock down by creating an image that the latest Apple idea is not ready for prime time. Through bluffing and his contacts at the trading desk and phone service providers, Jim believes he can keep the stock down. He says that this is all what’s really going on under the market that you don’t see. “What’s important when you’re in that hedge fund mode is to not do anything remotely truthful. The truth is so against your view that it’s important to create a new truth to develop a fiction.” Watch the rest of the video to gain more insight into the extent of manipulation.
With John Paul’s experience as a floor trader and knowing the techniques manipulators use first-hand, you can learn to trade consistently. Our price action methods are only based on current price conditions; not projections, not news stories, not trends or market behavior of the last year, months or days. By learning to recognize specific patterns in the market as they occur, you can become a successful price action trader. Take part in the Mentorship training where you can learn more in depth on how to trade through the manipulation.