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Short And Distort - Naked Short

Shorting is a word in traders jargon and means basically selling a stock, currency, paper or any other similar financial item that can be traded. Short and distort is as illegal as the pump and dump. The short and distort scheme is used in a bearish trend (prolonged period in which investment prices fall) and is the inverse method of pump'n'dump.

The short and distort player will look for stocks that might be overvalued. When there is little activity on a stock due to news, the short seller may come into the market and sells the stock. He will then spread unsubstantiated rumors and other kinds of unverified bad news in an attempt to drive down the equity's price. This can be done by negative posts to message boards, chat rooms, newsgroups, issuance of newsletters recommending the sale of the stock, seminars, private phone calls and similar. The plan is to entice investors to dump their stock with the prime objective of driving the price down. Instead of excitement, the distorter tries to stimulate fear.

When the price is falling, the manipulator will buy stock to cover his position. Buying the stock at a discount and thereby making a profit. In order to create a selling frenzy which the distorted must do in order to buy enough stock to cover his position and not drive the price up he will create the impression that there is a great deal of selling taking place. He will do this by having his friends and brokers cross stock to each other giving the impression of large volume. In the end the investors who bought stock at higher prices will sell at low prices because of their mistaken belief that the stock is worthless, caused by an effective negative campaign.

Article Source: http://www.articleresourceindex.com

Urban is an expert in fraud investigation, SEO, online marketing and business. This article is just an excerpt of Short And Distort. To read more go to Naked Short.

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