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Online Trading: Abuse Of The Internet

Aug 18, 2007
High-speed internet connection and advanced personal computers have opened new gates for people who have always been interested in trading online but never had the inclination to be out there on the market and trade from the floor of the stock exchange. The other option he had was to let a broker carry out transactions for him, but then one lost out on the charms of trading. It was not something where you can be involved yourself.

Today you can conduct trade on stocks of all sorts of companies right from the comfort of your house. No hassles. No brokers. Nothing. But one must also understand that the internet has also opened up great avenues for scams to be carried out. The main reasons for internet being such a hit with frauds and tricksters are its ability to reach millions of people at one go and the ease with which one can hide his or her identity behind the worldwide web. Many experts believe that internet is a much bigger threat than the physical world when you are talking about someone being duped. Let us see how these frauds are carried out. We will discuss one here.

Internet provides a great opportunity to manipulate stocks which are unheard of and have very light trading. Say a broker wants people to trade on a particular stock. For people to trade on a stock, they must know about it, and then they must be made to understand there will be a definite positive gain in trading on that stock. What the broker will do is start a thread on that stock. Most discussion forums and threads in them allow the same person to post innumerable messages under different aliases. So the broker will create n number of aliases for himself and post messages about the particular stock.

The text of the message would of course be favorable toward that stock now with so much discussion about a particular stock and most of it being positive, investors will get interested. They have no way to find out that it is the same broker who has been posting all the messages under various aliases. Rising interest transforms to rise in activity on the trade of that stock. A stock is manipulated. A similar thing can be done by the PR executive of the company or a large shareholder of the stock. This is a definite abuse of the internet.
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