What is 'market manipulation'?

Market manipulation refers to activities that are designed to artificially influence the price of securities in order to gain an unfair advantage or profit. This can involve practices such as creating misleading activity in the market, such as orchestrating trades that do not reflect true market value, or spreading false information to sway investor behavior.

By manipulating the market, the manipulator can make a security's price rise or fall, allowing them to buy low and sell high or sell high and buy back at a lower price, thus profiting from the price discrepancy they have caused.

Understanding this concept is critical for traders and those in the securities industry, as market manipulation is illegal and can lead to significant legal consequences. It is important for market integrity and investor confidence that prices reflect actual supply and demand rather than artificial influences.