The Pump and Dump Guide: A guide to buying penny stocks and the likelihood of your profit.
Introduction
This guide was designed to help people understand the basics of a pump and dump. We will cover how to find these companies, when they are likely to start pumping, how to know if someone is trying to pump, what happens when a company is being pumped, and finally we will look at the likelihood of your success in profiting from purchasing these stocks.
Disclaimer: This is not investment advice. I am not responsible for any losses you incur from acting upon the information in this document. Please do your own due diligence before purchasing any stock or investment product.
This guide will teach you how to buy penny stocks safely, and profit from the pump and dump.
What is a pump and dump?
A pump and dump is when a group of investors get together to hype up a stock in hopes that more people will buy it. This causes the price of the stock to rise, because there are more buyers than sellers. After the price rises, those who started the hype sell their shares, causing the price to drop.
How are most pennies pumped?
The price can be pumped by advertising on sites like Hot Stock Market or Penny Stock Dream. Those who advertise on these sites tend to use social media like Facebook and Twitter. You may see people post links to “hot tip” penny stocks in groups, or as personal messages on your wall. If you see these ads/posts, they are probably pumping a stock by telling others about it.
How do I find out if a stock is being pumped?
One way is just to search for the ticker symbol on Twitter or Google+ (and other social networks) for any posts mentioning it. If you see any posts that mention the stock’s ticker symbol, then it could be getting pumped. You could also go to a website like Hotstockmarket or Penny
Everyday people are investing in penny stocks and losing their hard earned money. They are lured in by the potential to make a large sum of money quickly. However, most people have no idea how these companies pump up the price of the stock to make it look like a great investment.
The pump and dump is an age-old scam that has been used in many different markets. The basic idea is to get others to buy a stock you already own so you can sell it at a higher price. This is illegal, but people still do it because there are few consequences. In fact, many of the people that run these scams get away with it and never get caught.
In this article I will explain how you can identify when a company is doing a pump and dump and how to determine if it’s worth your time to invest in this type of opportunity. I’ll also give tips on what not to do so you don’t end up losing all your money like many others before you!
Pump and dump, is the most common form of market manipulation. In this scheme, a stock is touted (via email, spam, message boards and instant messaging) to create a buying frenzy that will “pump” up the price. After the price has risen considerably, those who touted the stock sell off their shares (“dumping”), causing the price to drop dramatically and leaving uninformed investors with worthless stock.
Pump and Dumps are illegal. You can be prosecuted for taking part in them. Why then do people still take part in them? Because they work! People make money from them all the time. So why don’t more people know about them? Because there are so many scams out there that most people are turned away from it all before they ever get to find out how it really works.
Penny stocks can be extremely lucrative but you have to know what you’re doing before you start investing your money into them. The biggest problem with penny stocks is that a small investment can turn into a huge loss overnight if you’re not careful.
I have found a way to weed out the bad stocks from the good ones by looking at several factors such as price history and message board volume which I will explain shortly.
Pump and dump is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme “dump” their overvalued shares, the price falls and investors lose their money.
This practice is illegal based on securities law and can lead to heavy fines. The term pump and dump is said to have originated in the nineteenth century, when confidence men would “pump” up the price of a stock and then “dump” some of their holdings at an artificially high price.
The perpetrators (also called “promoters”) may take advantage of the uninformed, use boiler room techniques to create a false impression of demand, or spread false information in order to create demand. This practice is common with low-quality stocks such as those issued by fraudulent companies (“scam stocks”), which often trade for pennies per share, but can also occur with stocks of legitimate companies traded on foreign exchanges.
What is Pump and Dump?
Pump and dump scams are the act of buying a stock, typically one that has low volume, and hype the stock to make it more popular. This will encourage more people to buy the stock, making the price increase. At this point, the person selling would sell their stock for a profit.
How do you know if a pump and dump is happening?
There are a few ways to tell if a pump and dump is happening. The typical volume of this particular stock is around 100-200K shares per day, but during the rise in price there could be 9 million shares traded. This is a very obvious sign something is going on with this particular stock. Another way to determine if a pump and dump is happening is by doing research on who owns this company or who runs it. If you find out that it’s only one or two people running the company, then they have full control of what happens with this company and can easily pull off a pump and dump scheme. Another way to tell if it’s a pump and dump scheme is by looking at news articles on this particular stock. If there are no news articles being posted within 24 hours of the rise in price,
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. There are endless strategies to get you started investing and finding the right stock. This guide is one of the most comprehensive on the internet, but there’s always more to learn.
Investing in penny stocks is one of the riskier behaviors that traders and investors may engage in within the greater stock market. But, as with any endeavor in life, it’s possible to minimize your risks by doing plenty of research and by taking steps to protect yourself as much as possible.
Investing in penny stocks can be highly profitable if you have an effective strategy and do your due diligence.
Those who invest in penny stocks should be prepared for extreme volatility. Penny stocks are highly speculative investments that are generally considered only appropriate for the most aggressive investors. The prices of penny stocks fluctuate wildly from week to week or even day to day depending on what news comes out about a company.