Where are the capital market predators hiding?

What are capital market predators?

Capital market predators are parties that try to harm a number of naive investors. The capital market should ideally be a place for investors, both experts and beginners, to invest. Channeling excess funds from investors to be used by issuers to develop businesses so that the economy grows rapidly and creates more jobs with the final result helping to increase GDP growth every year.

Where are the capital market predators hiding?

* On the funding side
In investing in the capital market there is an intermediary or broker who is tasked with channeling investor funds to the intended issuer. As long as the intermediary used has not received an official operating permit from the capital market manager and OJK, there is the potential to become a predator. They will receive investors’ capital and channel it to places other than the issuer’s shares they want to buy.

* On the fund management side
In the capital market, there are many issuers competing to offer the best financial performance in the hope that investors will be interested in investing. However, it cannot be denied that there are a small number of issuers whose only intention is to extract investor funds without channeling them to develop their business and deserve to be called predators. Various other crimes were committed, such as manipulation of financial statements, to embezzlement of investor funds by management. Slowly the company’s profits will decrease so that no dividends are distributed, the impact of which is that the stock price drops which gives double losses to investors. This condition is like falling down a ladder.

* On the price formation side
This is a gathering place for many predators. Various gimmicks were implemented, starting from pom-poms (pump and dump) which fall into the category of market manipulation, insider trading to front running.

– Examples of market manipulation: Stock prices are very dependent on the number of requests and offers. To make the price go up means that there must be a greater quantity of demand than supply. To make the price go down, just create the opposite condition. Well, there are a number of parties that take advantage of large capital and unique marketing methods so that they succeed in making the share price rise and finally releasing all shares when there are many novice investors who have just entered.

– Examples of insider trading: Company stocks are highly dependent on various policies and recorded performance. Better policies and financial performance sooner or later will have an impact on strengthening prices. At this stage, the company’s employees become the party that is very easy to share internal information with a number of traders outside those who are categorized as insider trading.

– Example of front running: Employees at a securities firm are sometimes aware of large transactions received for settlement. Because the impact can make certain stock prices rise significantly, the employees decide to participate in making the same transaction using their own capital.

Are there any forex market predators?

Reflecting on various cases of fraud in the past, at least there was once a forex market predator carried out by bankers at international banks by manipulating the price of each pair. But now it seems that it has started to decrease as seen from price volatility which has dropped dramatically compared to before.

Capital market predators are parties seeking profits in the stock market at the expense of other parties. They are not like ordinary market participants who seek to profit from rising prices in the stock market, in an effort to generate their own profits predators sacrifice others. So they are called predators because of their destructive power against other actors in the capital market, whose main victims are retail investors.

The actions of stock market predators are often actions that violate capital market regulations and violate legal provisions, but they are slippery so it is difficult to ensnare them with the applicable rules, even though some of these predators are also entangled by law, usually they can be ensnared for losses. what they do is huge.

Basically the capital market is like a wilderness where the strong prey on the weak. However, there are regulations that limit the behavior of traders, issuers and investors in the capital market so that they cannot act arbitrarily. They must not deliberately cause the other party to suffer losses, especially if the action clearly violates existing regulations.

In the forex market there are also predators, of course the names are not capital market predators, they are called forex market predators. Similar to predators in the stock market, predators in the forex market are also parties seeking profits in the forex market at the expense of other parties. The perpetrators are not playing games, they can be big banks, hedge funds, and forex brokers. An example of a forex market predator is George Soros, he managed to knock down the GBP exchange rate in 1992, and in 1998 managed to drop the Thai bath rate which then spread to other Asian countries, including Indonesia which was the cause of the collapse of the New Order and the establishment of the Reformation Order, which unfortunately the Reform Order turned out to be more corrupt than the New Order.

In fact, stock dealers don’t just fry stock prices so that there is an increase that attracts retail investors’ buying interest. However, there are many strategies carried out including deliberately working with issuers to make policies that benefit these predators. Predatory actions can be combined between the stock frying method and manipulation with issuers. For example, Z stock, whose price is at the level of 200 rupiah, where the issuer company is not very good in terms of fundamentals. However, they cheated by cooperating with the dealer to fry the shares and periodically issuing statements supporting the action of buying Z shares. In the end, the price was able to reach the 2000 level so that there was a profit of up to 1000% and it was the right time to start releasing share ownership because already big profit.

Forex market predators can be carried out by bookie brokers and can also be carried out by large traders, for example institutional traders. City brokers who are not regulated by the authorities can cheat traders by adjusting price ups and downs on currency pair charts. This has an impact on the loss results that traders receive because they target stop losses or even the margin of the client’s trading account. Then for forex predators by institutional traders usually run quite smoothly and it is difficult to know because they are able to move prices with their large capital. What is certain is that such predatory actions can be detrimental to retail traders, so beginners should be wary of them by taking preventive measures with measured risk management.