Protect Your Investments from Pump and Dump Scammers
Understanding Pump and Dump Stock Schemes
In the fast-paced world of stock trading, investors are often faced with various strategies and tactics used to manipulate stock prices for personal gain. One such scheme that has gained notoriety is known as “Pump and Dump.” This article aims to shed light on what Pump and Dump schemes are, how they work, and most importantly, how investors can protect themselves from falling victim to these deceptive practices.
What is a Pump and Dump Scheme?
At its core, a Pump and Dump scheme is a form of securities fraud where the price of a stock is artificially inflated (“pumped”) through false or misleading statements. These statements could be spread through various channels such as social media, online forums, or even fake news outlets. Once the stock price has been pumped up and unsuspecting investors buy in, the fraudsters behind the scheme sell off their shares at the inflated price (“dump”), causing the stock price to plummet and leaving innocent investors with significant losses.
How Do Pump and Dump Schemes Work?
Pump and Dump schemes typically follow a predictable pattern. First, the fraudsters identify a low-priced or obscure stock with low trading volume. They then