High Close is a stock manipulation tactic that involves making a series of small trades at increasingly higher prices during the last minutes of trading before the close. This method can be used by market manipulators to paint a more favorable picture towards a stock than what would be expected typically. It is employed in particular with stocks that have low liquidity and a high level of information asymmetry (when one side in a transaction has more information than the other).

By making the series of small trades at a higher price, the manipulator can create a false impression that the stock is in demand, pushing prices up to attract more buyers. This tactic can be used to artificially inflate the value of a stock or to prop up a stock’s price when it is declining.

In addition to making numerous trades at a higher price, it can also involve engaging in “wash” trades where the manipulator buys and sells the same stock at the same time to inflate the trading volume and give more outsiders the impression that the stock is in high demand. High Close trading is typically done through brokerages, but it can also be done with computer algorithms.

To determine if a stock is being manipulated by a High Close, it’s helpful to use candlestick charts. These charts provide visual representations of the prices and trading volume for any given stock, which allows investors to detect any suspicious trading patterns. If a clearly delineated pattern emerges where the same small trades occur rapidly in the final minutes of trading, it could be indicative of a High Close.

High Close is prohibited by the U.S. Securities and Exchange Commission (SEC) due to its deceptive nature and potential to harm investors. If the SEC suspects a person or organization of engaging in this type of manipulation, they will investigate the case by gathering and analyzing trading logs, records, emails, and other documents. If it is determined that they have been engaging in manipulation, they can face serious legal consequences.

Overall, High Close is an unethical stock manipulation tactic that benefits certain investors while causing harm to others. It is important to be aware of this tactic and to monitor any suspicious trading activity for possible signs of manipulation. Doing so can help protect investors from being taken advantage of by unscrupulous market manipulators.