Fried stocks are stocks whose prices are deliberately raised in a manipulative manner, usually by certain parties who want to make big profits.

The increase in price often does not reflect the actual condition of the company, but rather because of the game in the market. At first glance, these stocks look tempting because they can rise quickly, but the risk is also very high.

The stock price can suddenly drop, causing investors who have already bought to actually lose big. To find out more about fried stocks, see the full review below.

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What is Fried Stock?

Basically, gorengan stocks are stocks whose prices are manipulated to make them look attractive, even though they are not supported by strong fundamentals. Here is a complete review of the definition and causes of their occurrence:

1. Definition of Gorengan Stocks

Fried stocks are stocks with unnatural price movements that can experience Upper Auto Reject (ARA) or Lower Auto Reject (ARB) in succession without strong fundamental reasons.

This price spike or decrease usually occurs due to manipulation by certain parties called stock dealers. Stock dealers deliberately manipulate stock prices to gain profits in the short term.

The dealers will buy shares in large quantities so that the price increases and attracts the interest of other investors.

After the price rises high enough, they sell their shares to reap huge profits. Retail investors who are late in selling their shares are at risk of experiencing major losses because the price can drop drastically in a short time.

Some investors, both retail and institutional, may be tempted to invest in gorengan stocks because of the potential for quick profits.

However, the risks involved are also very high, because the stock price does not reflect the true value of the company.

2. Causes of Fried Stocks

Fried stocks occur due to price manipulation carried out by certain parties, such as stockbrokers, to create the impression that the stocks have great profit prospects.

One strategy used is pseudo-transactions, where the broker buys and sells shares in large quantities to artificially increase demand.

When many investors are interested and start buying, the stock price will continue to rise. However, after the price reaches its highest point, the broker begins to release its shares gradually.

This causes the price to fall rapidly, causing investors who are late to realize the situation to suffer huge losses.

In addition, fried stocks often come from companies with weak fundamentals. This means that the increase in the stock price is more influenced by the broker’s game than by the company’s business performance itself.

Therefore, although it looks profitable in a short time, fried stocks have a high risk and can harm investors who are not careful.

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Characteristics of Fried Stocks

Fried stocks have price movements that do not reflect the company’s fundamentals and are more influenced by market manipulation. Here are some of the characteristics:

1. Unreasonable Price Increases

Fried stocks are often included in the Unusual Market Activity (UMA) list issued by the Indonesia Stock Exchange (IDX) because they experience extreme price spikes in a short period of time.

For example, stock prices can rise for several days in a row without any news or business developments to support them. IDX itself limits the increase in stock prices per day, namely:

• Stocks above IDR 5,000, daily increase limit of 20%.
• Stocks IDR 200–IDR 5,000, increase limit of 25%.
• Stocks below IDR 200, increase limit of 35%.

If a stock is on the UMA list, it means that it is under strict supervision because it has the potential to be manipulated by certain market players.

2. Sharply Increasing Transaction Volume

Fried stocks usually come from small companies with low market capitalization. However, on certain days, the volume of these stock transactions can spike sharply, even equivalent to blue chip stocks with large capitalization.

This unnatural spike in volume is often an indication that someone is deliberately manipulating the stock price.

3. Unbalanced Bid and Offer

Fried stocks often show an imbalance between bid (the price requested by the buyer) and offer (the price offered by the seller). In many cases, the difference between bid and offer is very thin, even only one lot per price.

This condition makes it easy for stockbrokers to set prices up or down quickly, creating unhealthy price fluctuations that do not reflect the company’s fundamental value.

4. Uncontrolled Price Movements

Fried stocks have very high volatility, with sudden sharp price spikes followed by drastic declines in a short time.

This price movement is often not supported by business developments or company fundamentals, but is just a game of speculators in the market.

Investors who are not careful can experience huge losses if they are late in selling their shares before the price drops.

5. Companies with Unsolid Performance

Although stock prices soar, the company’s financial performance often declines or stagnates.

In some cases, companies even experience major losses, but their stock prices continue to rise without any supporting news or information.

This shows that price increases are more influenced by market manipulation than by actual business performance.

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Risks of Investing in Fried Stocks

Investing in fried stocks may seem tempting, but the risks are very high. Unstable prices and potential market manipulation can cause huge losses for investors. Here are some of the risks:

1. Large Financial Losses

Fried stocks have high volatility, where prices can soar sharply in a short time, but can also fall quickly.

Investors who are trapped in these stocks often experience huge losses when the stock price suddenly falls, especially if they do not have time to sell before the price drops.

2. High Volatility and Uncertainty

Fried stocks can make stock prices rise or fall drastically in a short time, making it difficult for investors to make decisions. Although high volatility can provide opportunities for profit, the risk of losing capital is also very high.

Therefore, investors must understand their risk profile before deciding to invest in this type of stock.

3. Vulnerable to Market Manipulation

Fried stocks are often manipulated by certain parties, such as stock dealers, who have large capital to control prices.

They can artificially inflate the stock price to attract retail investors, then sell the stock at a high price and leave small investors at a loss.

That is what makes gorengan stocks a dangerous investment instrument, especially for inexperienced investors.

How to Avoid Gorengan Stocks

To avoid the trap of fried stocks, investors need to be more careful in analyzing stocks before buying. Here are some ways that can be done:

1. In-depth Fundamental Analysis

Before buying stocks, do a fundamental analysis by checking financial reports, company performance, and business prospects.

Healthy stocks have strong fundamentals and do not only depend on unreasonable price movements.

2. Check Stock Liquidity

Stocks with low liquidity are easier to manipulate by traders. Make sure the stocks you choose have a stable transaction volume and do not experience suspicious spikes in a short time.

3. Beware of Unreasonable Price Increases

If a stock experiences a sharp price spike without any clear news or fundamental reasons, then you should be careful. This spike could be a sign of price manipulation by certain parties.

4. Use Stop Loss or Trailing Stop Techniques

Using a stop loss can help limit losses if the stock price starts to fall drastically.

The trailing stop technique can also be used to lock in profits when the stock price rises so that you don’t get caught in a sudden price drop.

5. Diversify Investment Portfolio

Don’t focus on just one stock or one type of investment. Instead, allocate assets to various instruments such as big cap stocks, mutual funds, gold, or other investments to reduce the risk of gorengan stocks.

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Identifying Fried Stocks Using Tools and Techniques

To avoid the trap of fried stocks, investors can use several tools and techniques to identify them. Here are some ways to do it:

1. Using the Order Book

Check the order book pattern to see if there is an imbalance between buying and selling. If the number of purchases is much greater than selling for no apparent reason, then it could be a sign of market manipulation.

2. Pay Attention to Price Movements in a Small Time Frame

Fried stocks often show sharp spikes or drops in price in a short time. If the stock price continues to move up or down extremely without any news or fundamental reasons, then you should be careful.

3. Pay Attention to News and Market Sentiment

Stocks that experience price spikes due to certain sentiments without fundamental support are often high risk. Beware of stocks that rise drastically just because of rumors or unverified issues.

Conclusion

So, that was an interesting discussion about Fried Stocks: What Are They and How to Avoid Them? which you can read in full at the Crypto Academy at INDODAX Academy. and not only increase your insight into investment, here you can also find the latest crypto news about the crypto world

In conclusion, gorengan stocks may look profitable in the short term, but the risks are very high, especially for investors who are less careful.

Stock prices that soar sharply without fundamental support often end in drastic declines that can cause major losses.

Ultimately, understanding the characteristics of gorengan stocks, analyzing them carefully, and implementing diversification and risk management can help investors make wise decisions and avoid investment traps.

For the latest information, INDODAX will soon launch a new feature that allows users to invest in stocks traded on the United States stock exchange.

With this feature, users can access more than 50 stocks from the US market, so they can expand their investment portfolio outside of crypto assets in the same account on the INDODAX platform.

FAQ

1.What is meant by gorengan stocks?
Stocks whose prices are manipulated without a strong fundamental basis, often by bookies, to create short-term profits.

2.How do you know gorengan stocks?
Check for unreasonable price increases, very high transaction volumes, and price movements that are not in line with the company’s performance.

3.Are gorengan stocks always risky?
Yes, gorengan stocks tend to be high risk because of their high volatility and are not supported by solid fundamentals.

4.How to avoid gorengan stocks?
Conduct fundamental analysis, check liquidity, avoid stocks with unreasonable movements, and don’t get caught up in market hype.

5.Is there a strategy for investing safely?
Diversify your portfolio, use stop loss to protect yourself, and always do research before buying stocks.