I keep getting calls from people all around India telling me that they have allowed someone else to trade in their account and are now losing money heavily. Do not let anyone else trade in your account. Keep your account username and password secured like you keep your bank account password secured. Let us see what damage it can do.
Out of greed/expectation/laziness/in faith or for whatever reason people let someone else (mostly brokers) trade in their account.
This is a a very bad practice and should never be done. Do not allow anyone whether your broker or friend or relative trade in your account on your behalf. You do not know what they have in mind and what they may do to your account.
I hope you have an idea of trading fraud. Trading fraud is shorting a low liquid stock in huge quantity in someone else account and when the stock falls buy in their own account. When the stock rebounds, they immediately sell for a profit.
Of course this is not possible in a small account but possible in a big account like 10 lakhs and above. For Intraday shorting 5x (five times) leverage is given. So a 10 lakh account can short a stock intraday for 50 lakhs. For a low volume stock this is a huge short and immediately the stock will fall, giving a great opportunity for a trading fraudster to make 5 times the money in his account in a single day.
Look at this PC Jewellers stock price on 2-Feb-2018. The stock opened at 460, went down all the way to around 220 and bounced back to around 400. All within minutes. Imagine if someone bought the stock with 5 times intraday leverage 10 lakhs at 220 and sold at 400. This would have resulted a profit of:
50,00,000/220 = 22727 stocks bought.
400-220 = 180*22727 = 40,90,860.00
That is a profit of Rs. 40,90,860.00 (40 lakhs 90 thousand 860) in a single day:
PC Jewellers stock price on 2-Feb-18
However the above is just an example. It may not have happened but I wanted to explain to you a fraud possibility. Who bears the loss of Rs. 40 lakhs 90 thousand 860? The person on whose account the stock was shorted.
May 6, 2010, Flash Crash was done by Navinder Singh Sarao, a trader who damaged stock markets in US sitting in his home. This was a United States trillion-dollar stock market crash done by not fraud as written above but spoofing algorithms. He made more than $40 million in profit from trading during the Flash Crash in a single day. Sarao was released on a £50,000 bail with a full extradition hearing scheduled for September with the US Department of Justice. No idea where he is now.
Spoofing is shorting millions of dollar of stocks and then cancelling immediately and then buying at the bottom. This is done in milliseconds by software. The world over now spoofing is banned. Now before placing an order a check is done. If you place a limit order for shorting stock, a check is done by system to see if the shorting is done within specified limits else the limit order is cancelled.
So do not let anyone trade on your behalf in your account.
Click to Share this website with your friends on WhatsApp
COPYRIGHT INFRINGEMENT: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However, every trade depends on the trader and his level of risk-taking capability, knowledge and experience. Moreover, stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.
DISCLAIMER: I am NOT an Investment Adviser (IA). I do not give tips or advisory services by SMS, Email, WhatsApp or any other forms of social media. I strictly adhere to the laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles on this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given on this website. I am not responsible for any investment decision you take after reading an article on this website. Click here to read the disclaimer in full.
My student gets the Winner's Certificate of Zerodha 60-day Challenge - Click here and Open Stock Buy and Sell Free Account with Them Today!!!
Testimonial by a Technical Analyst an Expert Trader - Results may vary for users
60% Profit Using Just Strategy 1 In A Financial Year – Results may vary for users
Testimonial by Housewife Trader - Results may vary for users