Who really moves stock prices? What scams should you watch out for? And how do you tell real news from noise? A plain-English guide to the hidden forces behind your investments.
Welcome to the first course in the Getting Started in the Stock Market series! Before learning how to pick stocks, size positions, or build a portfolio, you first need to understand the playing field. Part 1 pulls back the curtain on the invisible forces that make markets move — and how to avoid becoming their victim.
The stock market has many participants with very different levels of power. There are big institutional funds controlling trillions, central banks setting the rules of the game, regulators trying to keep things fair, and retail investors like you who are often the last to know. Some people try to cheat (market manipulators). To succeed, you need to understand who is who, what the rules are, and how to spot when someone is breaking them.
The players and their real power
Scams and how to spot them
Signal vs noise, VIX, real trends
Regulators, cash, and staying safe
Reading time: ~18 minutes | Level: Beginner | Also available in Expert French
When you buy a stock, someone else is selling it to you. That someone could be a trillion-dollar hedge fund, an algorithm executing in microseconds, or a market maker who does this thousands of times per day. Knowing who you are trading against changes everything about how you should behave — and what advantages you actually have.
Good catch! Every trade has a buyer and a seller, so the same trade gets counted on both sides. Also, categories overlap — many HFT firms are also market makers. A single entity can fill multiple roles simultaneously, which is why the percentages add up to well over 100%.
The GameStop saga is the perfect example of what happens when these players collide.
Lesson: Understanding who the other players are helps you know when you have an advantage and when you are the one at a disadvantage.
Go further: Part 2 — How to Pick Stocks — 3 simple methods to choose your first stocks
If it sounds too good to be true, it IS too good to be true. A "guaranteed" return of 10% per month, an "insider tip" on Telegram, a stock that "will go 100x this week" — these are scam signals, not opportunities. The stock market rewards patience and research, not greed.
Market manipulation works by exploiting what you do not know. Manipulators rely on the fact that most investors have never heard of these tactics. The scams below are the most common ones used in financial markets. Once you know how they work, you will never fall for them.
Imagine someone opens a lemonade stand. They tell all their friends to come buy lemonade and create a huge line. People passing by see the crowd and think: "This must be amazing lemonade!" So they get in line too. But the original owner has already sold all the lemonade at a high price and walks away. The crowd is left with overpriced, mediocre lemonade.
How it works:
Real example — Squid Game Token (2021): A crypto token named after the Netflix show gained +75,000% in a few days. The creators then drained all the money in one transaction (called a "rug pull"). Total loss for buyers: ~$3.4 million.
Imagine a band that buys all their own concert tickets to make it look like they are sold out. When real fans see "SOLD OUT," they think: "This band must be amazing!" and pay more for resale tickets. But the "demand" was completely fake.
How it works: A person or group buys and sells the same stock or crypto token using different accounts they control. This makes it look like there is lots of trading activity and interest. Real buyers get tricked into thinking the asset is popular.
Very common in crypto: A 2019 study by Bitwise found that 95% of reported Bitcoin volume on unregulated exchanges was fake (wash trading).
Insider trading means using confidential company information to trade stocks before that information is made public. It is illegal because it gives an unfair advantage over every other investor in the market. The SEC actively investigates and prosecutes these cases.
How it works: A company executive (CEO, director, or employee) knows something big is about to happen — a merger, great earnings, or a major problem — before it is publicly announced. They trade on this secret information, or they tip off a friend who then trades.
Famous case — Martha Stewart (2001): The celebrity sold her stock in a company called ImClone before bad news was announced. She avoided losing only about $45,000, but was sentenced to 5 months in prison. Not worth it.
You cannot control insider trading, but you can look for its clues. If you see unusual trading volume on a stock right before a big announcement, that is often a sign that insiders were trading. You can check insider trades legally reported on the SEC website (Form 4 filings).
Many finance influencers on YouTube, TikTok, and Twitter/X are paid (in cash or tokens) to promote specific stocks and crypto projects — without disclosing it. Their followers trust the recommendation and buy in. But the influencer and their sponsors are already selling. The followers become the "exit liquidity" — the last buyers before the price crashes.
The VIX is like a weather forecast for the stock market. Just as a weather report tells you whether to expect sunshine or storms, the VIX tells you whether investors expect calm markets or wild swings. A low VIX (under 15) means blue skies. A high VIX (over 30) means a storm is hitting. And just like weather, the VIX is a prediction — it tells you what people expect, not what has already happened.
The VIX is a number that usually ranges from about 10 to 80. Here is what each range means:
Markets are super confident — maybe too confident. Ironically, big crashes often start when the VIX is very low, because nobody is prepared. What to do: Stay invested but keep some cash on the side just in case.
This is the historical average. Markets are functioning normally. What to do: Invest normally, nothing to worry about.
Investors are getting worried. Markets might drop 5-10%. What to do: Be more cautious with new purchases. Do not put all your money in at once.
A crisis is happening. Markets are falling hard. But here is the counterintuitive part: this is where great buying opportunities start appearing. Warren Buffett says: "Be greedy when others are fearful." What to do: Start looking for quality stocks at a discount, but do not rush in all at once.
Total panic. This only happens a few times per decade (COVID crash in 2020: VIX hit 82, Financial crisis 2008: VIX hit 80). Historically, investors who bought the S&P 500 when the VIX was above 40 made an average of +25% over the next 12 months. What to do: If you have a 3+ year horizon and cash to invest, start buying — gradually.
The VIX helps you understand the mood of the market. When the VIX is high and everyone is panicking, that is often the worst time to sell and the best time to buy. When the VIX is very low and everyone is euphoric, that is when you should be cautious. It is a simple tool that helps you do the opposite of what your emotions tell you to do.
Some products let you "invest" in the VIX (like UVXY or VXX). Do NOT buy these. They are designed for professional traders and lose money over time. UVXY has lost 99.9% of its value since it was created. If you want to know the VIX, just check the number — you do not need to trade it.
Go further: Part 6 — Recovering from a Loss — What to do when fear takes over and your portfolio drops
Keeping cash in your investment account is not "doing nothing" — it is strategically waiting for a better opportunity. Cash gives you the ability to buy when prices drop, which is exactly when the best deals appear. Even Warren Buffett had $334 billion in cash at the end of 2024, waiting for the right moment to deploy it.
| Market Mood | VIX Level | Recommended Cash | Why |
|---|---|---|---|
| Bull market (everything going up) | < 18 | 10-15% | Keep a small reserve to buy dips |
| Uncertain / nervous | 18-25 | 20-30% | Reduce risk, keep powder dry |
| Bear market / falling | 25-40 | 30-50% | Protect your money, prepare to buy the panic |
| Total panic | > 40 | Deploy your cash! | This is when you buy — but gradually, not all at once |
Staying in cash is a temporary, short-term decision (a few weeks to a few months). Trying to predict the exact top and bottom of the market ("timing the market") almost always fails. A JPMorgan study found that missing just the 10 best days of the S&P 500 over 20 years cuts your returns almost in half. Stay invested most of the time, with some cash on the side.
Every day, you are bombarded with 500+ "signals": tweets, news alerts, Telegram messages, YouTube videos, broker notifications. 95% of it is noise — information that has zero impact on your investment returns. The real skill is not knowing more, it is knowing what to ignore. Only a handful of data points — Fed decisions, inflation numbers, earnings reports — actually move markets in a lasting way.
| Signal | What It Is | How Often | Impact |
|---|---|---|---|
| Federal Reserve (Fed) | Interest rate decisions | 8 times per year | BIG |
| Inflation (CPI) | How fast prices are rising | Monthly | BIG |
| Jobs Report (NFP) | How many jobs were created | First Friday of each month | BIG |
| Earnings Reports | How much profit companies made | Every 3 months | BIG (for that stock) |
| Geopolitical Events | Wars, trade deals, sanctions | Unpredictable | VARIES |
Before reacting to any piece of financial news, ask yourself these 3 questions:
For one week, stop watching financial news, stop checking Twitter/X for stock tips, and stop reading Telegram groups. Just check your portfolio once a day (in the evening). At the end of the week, compare your results. In 80% of cases, people perform better when they consume less financial noise. The noise pushes you to overtrade, panic, and make emotional decisions.
Go further: Part 2 — Using AI for Research — How ChatGPT and Perplexity can help you analyze stocks
Some fashion trends last forever — jeans have been popular for over 100 years. Other trends last one summer and disappear (remember fidget spinners?). Investing works the same way. Some trends, like artificial intelligence, will reshape the world for decades. Others, like the metaverse, turned out to be a fad. Learning to tell the difference is one of the most valuable investing skills you can develop.
| Check This | Real Trend | Hype / Fad |
|---|---|---|
| Who is spending money? | Big companies (Google, Amazon) are investing billions | Only tiny startups with no revenue are involved |
| Are there ETFs and indices? | Pension funds and ETF providers have created dedicated products | Mostly retail speculators buying in |
| Are governments making rules for it? | Regulatory frameworks being built (AI Act, IRA, MiCA) | No legal framework, gray zone |
| The 10-year test | Will still be around in 10 years (AI, aging, clean energy) | Will be a memory in 3 years (metaverse, NFT art) |
Will it still be here in 10 years? If yes, invest in it (buy ETFs or the leaders in that space).
Will it be forgotten in 3 years? If yes, maybe trade it short-term with tight stop-losses, or just skip it.
Not sure? Do nothing. Wait for clearer signals. There is no penalty for sitting on the sidelines.
A new trade policy, an election result, or a war can change the investment landscape overnight. But here is the key insight: the risk is not the event everyone is talking about (that is already "priced in" — the market has already adjusted for it). The real danger is the surprise that nobody saw coming. The events on every front page are already reflected in stock prices. The ones that crash markets are the ones nobody expected.
| Risk | What Is at Stake | Affected Sectors |
|---|---|---|
| Ukraine / Russia | Energy prices (oil, gas), food prices (wheat) | Energy companies, defense, agriculture |
| Taiwan / China | Computer chips (TSMC makes 90% of advanced chips) | Tech, semiconductors, Apple, NVIDIA |
| Middle East | Oil prices (20% of world oil passes through the Strait of Hormuz) | Energy, airlines, shipping |
| US / China trade war | Tariffs on imports, supply chain disruptions | Tech, autos, consumer goods |
When a political leader makes a dramatic announcement (tariffs, sanctions, threats), the market often drops 1-2% immediately. But 60% of political announcements are modified, softened, or reversed within 48 hours. If you sell in panic right after the announcement, you are selling at the worst possible time. Wait 24-48 hours. Let the dust settle. Then decide.
The US stock market has followed a predictable pattern based on the 4-year presidential cycle:
No! This is a fun statistical pattern, but it should never be your entire strategy. Markets can do anything in any given year. Use it as a piece of context, not as a trading rule. The best approach is to stay invested through all 4 years and use cash reserves to buy opportunities when they appear.
Financial markets have regulators — government agencies whose job is to protect investors like you. They force companies to publish their financial results honestly, punish manipulators, and make sure your broker is not stealing your money. Knowing who they are and using their free tools gives you an advantage over 95% of investors who never bother to check.
| Regulator | Country | What They Do for You |
|---|---|---|
| SEC | United States | Forces US companies to publish their finances publicly. Punishes fraud and insider trading. Website: sec.gov |
| FINRA | United States | Regulates brokers. You can check your broker's record at brokercheck.finra.org for free. |
| AMF | France | Maintains a "blacklist" of unauthorized financial platforms. Always check before giving money to any platform. |
| FCA | United Kingdom | Registers and monitors brokers operating in the UK. Check if your broker is authorized. |
| ESMA | European Union | Oversees financial markets across Europe. Sets rules like MiFID II that protect retail investors. |
Regulators are your free bodyguards. They exist to make the market fair for everyone. Using their free tools (BrokerCheck, EDGAR, blacklists) gives you an informational advantage that most beginner investors never use. It takes 5 minutes and can save you thousands of dollars.
You now understand how the market works, who the players are, and how to avoid the traps. Great! But reading about swimming will never teach you how to swim. It's time to jump in — but smartly. This section shows you how to take your first steps without risking a single cent.
Your regular bank account can't buy stocks. You need a special account called a brokerage account. In France, there are three types — and picking the right one is super important for paying less tax.
After 5 years, you pay almost no tax on your gains (only 17.2% instead of 30%). On €10,000 of gains, that saves you €1,280 compared to a standard account. You can deposit up to €150,000. The only downside: you can only buy European stocks and certain ETFs.
You can buy everything: US stocks, crypto, options... But you pay 30% tax on all your gains (the "flat tax"). No deposit limit. Use it alongside your PEA, or to buy US stocks.
Tax advantages after 8 years, great for passing wealth to your children. Fewer investment choices than PEA or CTO. It's a good complement, but not the first account to open if you want to actively invest.
Here are the best brokers for beginners in France:
| Broker | PEA | CTO | Fees | Best for |
|---|---|---|---|---|
| Boursorama | €1.99 | All-in-one (bank + trading) | ||
| Fortuneo | €0 (1 order/month) | Small budgets | ||
| Trade Republic | €1 | Simple mobile app lovers | ||
| Bourse Direct | €0.99 | Lowest fees available |
Open your PEA TODAY, even with just €10. Why? Because the 5-year clock starts on the day you open it, not the day you invest. If you open now and don't buy anything for 2 years, in 3 years your PEA will be "ready" and your gains will be taxed much less. It takes 15 minutes online. Do it now, you'll thank me later.
It's a stock market simulator. You buy and sell stocks with fake money, but the prices are real. It's exactly like a racing video game: you learn to drive without risking crashing the car. When airline pilots learn to fly, they spend hundreds of hours on a simulator first. Same thing here.
Paper trading lets you:
The simplest way to start. Open a chart, click "Paper Trading" at the bottom, and you're off! You can buy and sell just like the real thing.
More complex, but it's the exact same software as the real account. If you plan to use Interactive Brokers later, it's perfect for practice.
Set yourself a goal: 30 paper trades before putting in real money. For each trade, write in a notebook: why you bought, your target, and the result. After 30 trades, you'll know if your approach works. Most beginners who skip this step lose their money within 6 months.
Go further: Part 2 — How to Pick Stocks — Ready to choose your first stocks? 3 methods explained simply
Some investment funds publish every day exactly what they buy and sell. This data is public and free. You can observe the decisions of professional fund managers, understand their logic, and learn from their moves — without paying a cent.
Two people who buy the same stocks can end up with very different results — because of taxes. Here are 5 simple tips to keep more money in your pocket.
The 5-year countdown starts when you open it. Even with €10. In 5 years, your gains will be taxed much less. Every day you wait is a day lost.
The PEA has a cap of €150,000. As long as it's not full, every euro in a CTO pays 30% tax instead of 17.2%. You are losing 12.8% of your gains unnecessarily.
If you withdraw money before 5 years, your PEA gets permanently closed and you pay 30% tax on all gains. After 5 years, you can withdraw freely.
If you lost money in the stock market, declare it! Those losses deduct from your future gains for 10 years. It's money the government owes you.
Dividends from US stocks in a PEA are taxed at 15% with no way to get it back. The solution: choose ETFs that reinvest dividends instead of paying them out (e.g., CSPX, PE500). You avoid this invisible tax.
Click each question to reveal the answer. Aim for 6/8 or better before moving on to Part 2.
Here are the most important terms from this article, explained in plain English.
| Term | Simple Explanation |
|---|---|
| Bear Market | When the market falls 20% or more from its peak. Named after a bear swiping downward. |
| Bull Market | When the market rises 20% or more from its low. Named after a bull thrusting its horns upward. |
| Central Bank | A government institution that controls interest rates and money supply (like the Federal Reserve in the US, or the ECB in Europe). |
| Dark Pool | A private stock exchange where big institutions trade without showing their orders publicly. About 30-40% of US stock trades happen in dark pools. |
| DYOR | "Do Your Own Research." A reminder to verify information yourself before investing, instead of trusting someone else blindly. |
| ETF | Exchange-Traded Fund. A basket of stocks you can buy as one single investment. For example, an S&P 500 ETF gives you exposure to the 500 largest US companies in one trade. |
| Fed / Federal Reserve | The US central bank. It sets interest rates and controls money supply. When the Fed speaks, the entire world listens. |
| FOMO | "Fear Of Missing Out." The emotional urge to buy something just because everyone else is buying it. A common trap for beginners. |
| HFT | High-Frequency Trading. Computers that trade thousands of times per second. You cannot compete with them on speed — compete with patience instead. |
| Insider Trading | Illegally using secret company information to trade stocks before that information is made public. A serious crime that can result in prison time. |
| Liquidity | How easy it is to buy or sell something. Apple stock has high liquidity (millions of shares traded daily). A rare painting has low liquidity (might take months to sell). |
| Market Maker | A company that is always ready to buy and sell a stock. They ensure there is always someone on the other side of your trade, so you can buy or sell instantly. |
| NFP (Non-Farm Payrolls) | A monthly US government report showing how many jobs were created. Released on the first Friday of each month. Markets react strongly to it. |
| "Priced In" | When the market has already adjusted for expected news. If everyone expects a rate hike, the stock price already reflects it before the announcement. |
| Pump & Dump | A scam where someone hypes up a stock/crypto, then sells when the price goes up, leaving everyone else with losses. |
| Retail Investor | An individual investor (like you) who is not a professional fund manager. You and me. |
| Rug Pull | A crypto scam where the creators drain all the money from a project overnight and disappear. |
| S&P 500 | An index tracking the 500 largest US companies. The most-watched stock market benchmark in the world. |
| Short Selling | Betting that a stock will go DOWN. You "borrow" shares, sell them now, and buy them back later at a lower price (hopefully). Very risky. |
| Stop-Loss | An automatic order that sells your stock if it drops below a certain price. It limits your maximum loss on any position. |
| VIX | The "fear index." Measures how nervous investors are about the next 30 days. Low = calm, high = scared. Ranges from about 10 to 80. |
| Wash Trading | Buying and selling to yourself using different accounts to fake trading volume. Illegal but common in unregulated crypto. |
Understanding markets: Michael Lewis, "Flash Boys" (2014) — a fascinating story about how robots took over the stock market. Reads like a thriller.
Separating signal from noise: Nassim Nicholas Taleb, "Fooled by Randomness" — why we constantly confuse noise for real signals.
The fear of investing: Morgan Housel, "The Psychology of Money" (2020) — short, easy-to-read chapters on how emotions affect investing.
Geopolitics and markets: Ray Dalio, "The Changing World Order" (2021) — how political shifts affect financial markets.
Free online resource: Investopedia.com — the Wikipedia of finance. Look up any term you do not understand.
Part 1 — Understanding the Market : Players, manipulations & signals (you are here)
Part 2 — The Stock Picking Guide : 4 simple methods to choose your stocks
Part 3 — Building Your Portfolio : Number of positions, diversification, risk management
Part 4 — The Art of All-In : When and how to concentrate capital on a conviction
Part 5 — Advanced Strategies : Options, hedging, and pro techniques
Part 6 — Recovering from a Heavy Loss : Psychology, recovery plan and adaptive sizing
Disclaimer: This guide is for educational purposes only. It is not personalized investment advice. Past performance does not guarantee future results. Investing in the stock market involves risk of loss. The examples of scams and market manipulation are provided for educational illustration and do not constitute buy or sell recommendations. DailyTickers is not a registered investment advisor. Please consult a licensed financial advisor before making any investment decisions.