As the stock market continues to be tumultuous, there are increasing numbers of people that fall into what’s called “trading scams.” These scams are organized and usually take advantage of day traders. They lure day traders into investing money that they don’t have in real estate, futures, options, or even a mutual fund. While some people are out to just swindle as much money as possible, others are looking for real investments. Day traders can end up losing their life savings through a Pump and Dump.
In order to protect your self from becoming one of the victims of scams, you need to know what types of scams are out there. One type is known as a “Pump and Dump”. This refers to when a company or individual promises to make you lots of money overnight. The promises include large amounts of money. These scams will promise a “Pump” and “Dump” and promise you to receive a monthly, quarterly, or yearly income.
Another type of trading scams is known as a “Pile and Dump”. This is when a trading scam group recruits investors by promising them that they can make lots of money in penny stocks. They encourage you to invest money into their “laboratory”. Once you invest, they give you small amounts of stock and tell you that it is worthless and not worth anything.
Penny stock scams have been around for decades, but the most famous type of trading scam remains that of the “Pump and Dump”. Two common trading scams that are very popular online involve the selling of fake stocks and the buying of pennies. A pump and dump occurs when a person or trading leader offers a certain stock to be sold at a very high price. They tell people that they will buy it at a certain price, then unload it and make money on the sale. In many cases, there are very few buyers, so the person who bought the phony stock makes a fortune.
The “Pump and Dump” has a long history, and many scammers have even used newer versions. In recent years, more attention has been focused on two types of trading scams: penny stock scam recovery services, and domain name squatters. It is becoming much harder to protect yourself against these scams because they often involve two or more individuals.
You can prevent getting scammed by choosing a reputable company. You should not pay for the first analysis, or to pay any fees to a company. There are many penny stock scam recovery services on the Internet, so you may be tempted to try their services. Many of these companies are new and haven’t had the experience required to detect and document false claims. You should avoid these services and use a reputable company that specializes in this field.
There are two types of recovery services that you need to avoid. The first is called a “pump and dump” and the second is called a “domain name squatting”. A “pump and dump” involves a person creating a huge volume of stocks very quickly, usually based on rumors or other unverified information. They then unload all of their securities at once, leaving buyers without the investment opportunity. Domain name squatters, on the other hand, can create millions of stock shares very quickly, but do not allow buyers the opportunity to purchase any of their securities.
Trading is exciting, and people can get into the market at any time. If you are new to day trading, however, it is recommended that you begin with mini account or even demo trading before moving up to a higher account. A good broker will help you become a profitable trader and will also provide you with educational material and advice. He or she will be able to help you identify the risk factors associated with trading and can show you how to minimize your losses. If you have a good broker, he or she will also be able to educate you on strategies that you can use in order to increase your profits. Day trading can be a very profitable profession if you find the right broker and follow his or her advice.