CMU: Is the market rigged?

By Jani Ziedins | Free CMU

Feb 10

Cracked.Market University

Spend any time with retail investors and it is almost guaranteed you will hear someone will complain, “the market is fixed.” This is one of the public’s most persuasive myths about the stock market. These people are convinced there is an evil puppet master rigging the system against hem.

My question to these cynics is always, “If you know the market is fixed, why would you do something so stupid as trading against it?” If they know for a fact big money is going to buy every dip, why would they do anything other than buying every dip? Don’t complain, take these valuable insights and profit from them! Complaining about it makes no sense.

In all honesty, I wish the market was fixed. That would make this so much easier. If there was a puppet master pulling the strings, all I need to do is figure out what his intentions are and follow along. Pilot fish swim behind sharks and live off the scraps. I’d be thrilled making a living as a pilot fish following the market manipulators and profiting from their leftovers. Unfortunately, there are no sharks controlling the market for me to team up with.

People think big institutions, high-frequency traders, hedge funds, and even the Fed is conspiring to ruin their trades. But if you spend any time reading the financial press, it doesn’t take long to realize these big institutions and hedge funds struggle with unprofitable trades just as much as we do. If these big players were rigging the system against us, don’t you think they would be making a ton of money? The brutal truth is 75% of professional money managers fail to even keep up with the dumb indexes every year. If these big players are manipulating the market, they sure don’t do a very good of profiting from it.

To be perfectly frank, what people really mean when they claim the market is fixed is, “I lost money and I refuse to take responsibility for my poor trading decisions”. Don’t be that guy! Take responsibility for your bad trades. Own up to them. Learn from them. And most importantly, don’t blame them on anyone else.

Just because your trade didn’t work doesn’t mean someone is out to get you. It simply means you didn’t understand all the factors at play. Learn from those mistakes and do better next time. Victims blame other people, don’t learn from their mistakes, and never succeed in this business. Don’t fall into that mindset.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM


About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.