How to Avoid The Most Popular Penny Stock Scams – Trading Tips …
Jul 25
How to Avoid The Most Popular Penny Stock Scams
Posted in General, Penny Stock Trading Tips, Uncategorized Email This Post
Many times penny stocks are fraught with dangers far beyond market price fluctuation. The low priced shares often attract the worse type of characters and confidence men. The best way to avoid being scammed by a penny stock bad actor is to follow the recommendation in a premium, proven, best penny stock picking advisory like Wealthpire’s Penny Stock Guru. This advisory studies the marketplace to present to you only the most likely to win penny stock advice.
Here are the two most popular penny stock trading scams right now.
1. The Pump and Dump
This is by far the most popular of the penny stock scams. Insiders buy or simply create a large quantity of shares at very low price of XYZ company.
Next, they hire a marketing firm to make phone calls, send out mailers and emails and design compelling brochures on why XYZ stock is such a good penny stock to buy.
This marketing effort drives the price higher in the stock, hence the pump.
After reaching a certain high price, the insiders sell all their shares sending the price plunging. This is the dump part of the scam.
Regular investors, referred to as “bag holders” or “little old ladies” by the penny stock scammers may lose their entire investment by the time the dump phase of the scam is finished.
2. Hackers
This insidious scam often originates in Eastern Europe or Russia. It involves hackers tunneling into large but idle stock trading accounts. Once in, the hackers buy all they can of a thinly traded stock that they own. This makes the shares skyrocket, lifting the shares of the stock they own. The hackers then sell the stock pocketing the proceeds.
Understanding these popular scams is the best way to avoid them!
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How to Avoid The Most Popular Penny Stock Scams – Trading Tips …
