How to recognize market manipulation

Many beginner traders fall into the trap of manipulation, not recognizing it in time. For example, you are trading the EUR/PLN currency pair with a capital of 10,000 PLN. You think you see a clear upward trend, so you buy at a rate of 4.60. Unfortunately, this is just a false move, after which the price sharply drops to 4.50 and you are forced to close your position with a 2% loss. Another mistake is improperly setting the stop loss. You set it too close to the entry price, e.g., at 4.58, and then a small 'stop hunt' knocks you out of your position before the market moves according to your initial forecast. In both cases, you lose not only money but also confidence.

Manipulations, such as 'stop hunts' and 'fake moves', can mislead even experienced traders. 'Stop hunts' are situations where large institutions intentionally move the price to activate stop losses set by smaller investors. After the liquidation of these positions, the price often returns to its original level, leaving you with nothing. 'Fake moves', on the other hand, are movements that seem to be the beginning of a trend but quickly reverse, causing chaos and losses.

If you invested 10,000 PLN and lost 2% on each false move and 'stop hunt', your losses would quickly accumulate. Let's assume that over the course of a month you make 10 such unsuccessful transactions. A loss of 2% on each of them totals 2,000 PLN – that's 20% of your capital! Not only are you losing money, but also the potential for further investing and increasing your capital.

To avoid these traps, it is worth applying a few strategies:

• Watch the volume: Low volume during price movement may indicate manipulation.
• Set stop loss flexibly: Give yourself a safety margin by setting the stop loss further than standard levels.
• Analyze the market context: Check if there are any important economic events that may affect the rates.
• Do not react impulsively: Give yourself time to analyze and do not succumb to short-term price fluctuations.

Every day, analyze at least one false transaction to better recognize manipulations.