What Is Manipulation?
Market manipulation is conduct designed to deceive investors by controlling or artificially affecting the price of securities. Manipulation is illegal in most cases, but it can be difficult for regulators and other authorities to detect and prove.
Market manipulation may involve factually false statements as well, but it always seeks to influence prices in order to mislead other market participants.
Key Takeaways
- Market manipulation aims to mislead other market participants.
- Manipulation is hard to detect and prove, but it's also harder to execute in the larger and more liquid markets.
- Two common types of stock manipulation are the pump-and-dump and the poop-and-scoop.
- Currency manipulation is a distinct political claim typically made in trade disputes between sovereign countries.
Manipulation Methods
Manipulation is more difficult for the more liquid, or widely traded securities. It is much easier to manipulate a penny stock with a tiny typical daily trading volume than the share price of a large-cap company with daily turnover valued in billions of dollars.
The pump-and-dump is a market manipulation often used to artificially inflate the price of a microcap stock before selling it. Less common is the inverse poop-and-scoop scheme, in which false derogatory statements are made about a stock in order to buy it on the cheap. There's also the short-and-distort variety, essentially a poop-and-scoop executed by short-sellers in order o profit.
While such schemes rely primarily on promotion or factual misstatements they are often supplemented by illegal trading tactics designed to deceive.
One common means is order spoofing, which involves the placing of numerous buy or sell orders designed to move the price of the stock, then canceling them once other traders have moved their own bids or asks accordingly. Order spoofing has tempted staff at large Wall Street firms alongside shady daytraders, and can take place in the bond and metals markets as well as in the stock market.
Currency Manipulation
Currency manipulation is an accusation often levied in trade or exchange rate disputes, notably by the U.S. against trading partners who are sometimes alleged to set the exchange rate of their currency against the U.S. dollar artificially low to boost exports. Governments and central banks can be accused of currency manipulation if they fix the exchange rate or seek to affect it less openly with market transactions from time to time.
Currency manipulation is a political term rather than a legal one because foreign exchange policies are set by sovereign countries. Currencies are fixed or allowed to float for a variety of internal and external motives, while currency manipulation claims are almost always the result of dissatisfaction with trade flows. As a result, whether a currency manipulation is taking place or not is often a subjective judgement.
The U.S. Treasury makes a semiannual report to Congress on the macroeconomic and foreign exchange policies of major U.S. trading partners in accordance with the Omnibus Trade and Competitiveness Act of 1988. The report uses evaluation criteria spelled out in the Trade Facilitation and Trade Enforcement Act of 2015. The December 2021 report concluded no major U.S. trading partner manipulated its currency's exchange rate against the U.S. dollar to gain an unfair competitive advantage in international trade, while singling out Vietnam and Taiwan for additional scrutiny.
Currency manipulation is a political claim rather than an illegal market deception.
Example of Currency Manipulation Claim
On August 5, 2019, the People's Bank of China (PBOC) set the Chinese yuan’s daily reference rate above 7 yuan per dollar for the first time in over a decade, depreciating the Chinese currency against the dollar and making Chinese exports cheaper in dollar terms. The rate was set after the announcement by the Trump administration of new tariffs of 10% on $300 billion worth of Chinese imports, which went into effect Sept. 1, 2019.
The same day the yuan exchange rate topped 7 per dollar, the Trump administration labeled China a currency manipulator, a designation lifted a few months later. The tariffs on Chinese exports, however, remained in place as of January 2022.
FAQs
7 classic tactics manipulative people use to control others
- 1) They flatter you with excessive compliments. ...
- 2) They guilt-trip you. ...
- 3) They give you the silent treatment. ...
- 4) They isolate you from friends or family. ...
- 5) They always play the victim. ...
- 6) They emotionally blackmail you. ...
- 7) They spread lies and rumors.
Manipulation is the skillful handling, controlling or using of something or someone. Whether it's the sculpture you made in art class or how you convinced your friend to do your homework — both are considered manipulation.
What is the definition of manipulation type? ›
Manipulative behavior refers to a person's use of gaslighting, love bombing, and other styles of interaction in a relationship used to gain power or influence over another. These tactics often include attempts to damage another person's emotional and mental well-being.
What are the manipulation techniques? ›
Manipulator uses sarcasm and put-downs to increase fear and self-doubt in the victim. Manipulators use this tactic to make others feel unworthy and therefore defer to them. Manipulators can make one feel ashamed for even daring to challenge them. It is an effective way to foster a sense of inadequacy in the victim.
What are the 6 tactics of manipulation? ›
We conducted two studies to identify the manipulation tactics that people use to elicit and terminate the actions of others. Factor analyses of four instruments revealed six types of tactics: charm, silent treatment, coercion, reason, regression, and debasem*nt.
What's the worst type of manipulation? ›
Gaslighting is a manipulative tactic that can be described in different variations of three words: “That didn't happen,” “You imagined it,” and “Are you crazy?” Gaslighting is perhaps one of the most insidious manipulative tactics out there because it works to distort and erode your sense of reality; it eats away at ...
Can you give me an example of manipulation? ›
During a disagreement or fight, a manipulative person will make dramatic statements that are meant to put you in a difficult spot. They'll target emotional weaknesses with inflammatory statements in order to elicit an apology. For example: “If you leave me, I don't deserve to live.”
What are the four types of manipulation? ›
While manipulative tendencies are often subtle and sometimes undetectable, there are four stages of manipulation.
- Flattery. The first stage is when the person who manipulates puts on a facade of being kind, caring, and helpful. ...
- Isolation. ...
- Devaluing and gaslighting. ...
- Fear or violence.
A manipulator will lie to you, make excuses, blame you, or strategically share facts about them and withhold other truths. In doing this, they feel they are gaining power over you and gaining intellectual superiority. Manipulators exaggerate and generalize. They may say things like, “No one has ever loved me.”
What is a master manipulator? ›
A master manipulator will never take responsibility for their actions. They'll always find someone else to blame or some external factor for their mistakes. They'll twist and turn facts to make themselves look innocent. If they've hurt you, they'll somehow make it seem like it's your fault, not theirs.
Characteristics of Manipulative Behavior
- Someone knowing your weakness and exploiting it for personal gain.
- Convincing a person to give up important people or things in their lives to create codependency.
- Withholding the truth, lying, and blaming you without taking responsibility for their actions.
- Making vague accusations.
On the surface, it's an obvious attempt to get what they want—but psychologically, we know behaviors are motivated by deeper factors. The overriding element in chronic psychological manipulation is always an issue of power and control. Manipulators are driven by a need for power and control over every situation.
What is the emotional manipulation method? ›
Emotionally manipulative individuals may often use guilt, sympathy, anger, and sarcasm to influence your thinking. They may also threaten you, purposely withhold information from you, and even isolate you from your loved ones as a way to keep you somehow reliant on the.
What is the biggest form of manipulation? ›
Gaslighting
Gaslighting is all about making you question yourself, including your memory, your trust in yourself, your sanity, what you're feeling, and even your own identity. This often shows up as the abuser calling you “crazy” or manipulating situations to instill doubt in yourself.
What are the nine manipulative skills? ›
Manipulative movements such as throwing, catching, kicking, trapping, striking, volleying, bouncing, and ball rolling are considered to be fundamental manipulative skills. These skills are essential to purposeful and controlled interaction with objects in our environment.
What is the most common manipulation? ›
Gaslighting
"Gaslighting is perhaps one of the most insidious manipulative tactics out there because it works to distort and erode your sense of reality; it eats away at your ability to trust yourself and inevitably disables you from feeling justified in calling out abuse and mistreatment."
What are the 4 stages of manipulation? ›
Under this model, the stages of manipulation and coercion leading to exploitation are explained as follows:
- Targeting stage. The alleged abuser may:
- Friendship-forming stage. The alleged abuser may:
- Loving relationship stage. Once they have established trust, the alleged abuser may:
- Abusive relationship stage.
