In the world of forex trading, the term “snake” is a slang term used to describe a deceitful trader or broker who manipulates the market to their advantage. This can be done through various means, such as insider trading, spreading false rumors, or manipulating prices to trigger stop-loss orders.
The term “snake” originated from the reptile’s reputation for being sneaky and sly, which is exactly how a snake trader operates. These traders are often considered unethical and can cause significant harm to other traders and the market as a whole.
One of the most common ways that snake traders operate is through insider trading. This involves using privileged information to make trades that will result in a profit. For example, if a trader has information that a company is about to release positive earnings results, they may buy shares in that company before the announcement is made, knowing that the price will go up. This is illegal and unethical, and traders caught engaging in insider trading can face severe penalties.
Another way that snake traders manipulate the market is by spreading false rumors. This can be done through social media, news articles, or word of mouth. For example, a trader may spread a rumor that a company is about to go bankrupt, causing other traders to panic and sell their shares. The snake trader can then buy these shares at a lower price and sell them later for a profit when the rumor is proven false. This type of manipulation is also illegal and can lead to significant losses for other traders.
Manipulating prices to trigger stop-loss orders is another tactic used by snake traders. Stop-loss orders are used by traders to limit their losses by automatically selling a stock when it reaches a certain price. Snake traders can place orders at these prices to trigger the stop-loss orders of other traders, causing the price to drop even further. They can then buy these shares at a lower price and sell them later for a profit.
In addition to these tactics, snake traders may also engage in other unethical practices, such as front-running, spoofing, or churning. Front-running involves a trader buying a security before a large order is executed, knowing that the price will go up. Spoofing involves placing orders with no intention of executing them to trick other traders into buying or selling at a certain price. Churning involves making excessive trades to generate commissions for the broker.
To avoid falling victim to snake traders, traders should always conduct thorough research and analysis before making any trades. They should also be wary of rumors and social media posts that may be false or misleading. Additionally, traders should only use reputable brokers and report any suspicious activity to the appropriate authorities.
In conclusion, a snake trader in forex is a deceitful trader or broker who uses unethical tactics to manipulate the market to their advantage. These tactics include insider trading, spreading false rumors, and manipulating prices to trigger stop-loss orders. Traders should be aware of these tactics and take steps to protect themselves from falling victim to snake traders.
