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Pump and Dump Scam | Psychology Behind it!

A pump and dump scam is an illegal act by an investor or a group of investors by promoting a stock they hold. They endorse using means like email, media channels, fake press releases, groups like the one I mentioned, etc.<br>If you want to trade, properly learn the craft from a good source. Also, keep your hard-earned money safe from scammers and fraudsters.

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Pump and Dump Scam | Psychology Behind it!

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  1. @ThelessonsGuy Pump and Dump scam How I ended up with bankrupt stocks A guide by Arjun & Arya

  2. Back in 2017, weeks before Bitcoin peaked to almost $20k, my friends introduced me to crypto trading. To invest, I took a personal loan, and within two weeks, my investment quadrupled. Luckily, because of the loan, I withdrew third of the amount before the crypto bubble burst to earn a profit. Within the next weeks, the rest of the amount turned into almost nothing and I lost all my confidence trading. Then my friends said there was some WhatsApp group that could help our money grow. They explained the details saying that the admins will periodically post a low valued cryptocurrency. All we need to do is buy them as soon as we see this message, and within a few hours, we can sell it for profit.

  3. Back in 2017, weeks before Bitcoin peaked to almost $20k, my friends introduced me to crypto trading. To invest, I took a personal loan, and within two weeks, my investment quadrupled. Luckily, because of the loan, I withdrew third of the amount before the crypto bubble burst to earn a profit. Within the next weeks, the rest of the amount turned into almost nothing and I lost all my confidence trading. Then my friends said there was some WhatsApp group that could help our money grow.

  4. They explained the details saying that the admins will periodically post a low valued cryptocurrency. All we need to do is buy them as soon as we see this message, and within a few hours, we can sell it for profit. Fortunately, or unfortunately, I was not able to participate, but it sure was interesting to listen. Each day my friends would give updates about the groups saying that someone created a script that reads these updates from the group and automatically buys or sells to get the maximum profit. Coming from a technical background, I knew that creating such a script was a simple task, but in all honesty, it never occurred to me that these actions will negatively affect someone until the same tactic hit on me.

  5. The psychology behind the pump and dump scam If you look at my experience again, newbies like me were confused as we did not understand the reason why something so amazing like the crypto could go down in value. We were hoping that the tides will change, and as soon as we see any upward moment, we will jump on it. Fear of missing out (FOMO) is real, and the people behind these scams know how to utilize this for their benefit. They will initiate the upward moment by buying, and once the gullible people join the bandwagon, they will start to dump everything for a profit. Those that remain end up with stock valued significantly less than what they paid.

  6. What is the pump and dump scam? A pump and dump scam is an illegal act by an investor or a group of investors by promoting a stock they hold. They endorse using means like email, media channels, fake press releases, groups like the one I mentioned, etc. If the promoter’s campaign is successful, it will entice unwitting investors to purchase shares of the target company. The increasing demand, price, and trading volume of the stock may convince more people to believe the hype and buy. This is when the promoters behind the scheme sell their shares, and soon the people who are unaware are left holding stock worth significantly less than they paid.

  7. How can you equip yourself to identify this scam? Generally, the scammers target penny stocks as it does not require that much of a capital to get the stock moving. Avoid offers or tips that are too good to be true. I made my mistake after reading an article from a popular site, ending up not being able to sell it until the company went bankrupt. Example: Screenshot of the bankrupt stock I bought back in 2018 at its peak.

  8. Conclusion It is highly unlikely that you can get rich quick by investing in the stock market because as much as 90% of the traders lose their money trading. If you want to trade, properly learn the craft from a good source. Also, keep your hard-earned money safe from scammers and fraudsters (tips to save money). Thank You!! Related stories from @The Lessons Guy How to improve work life balance How to deal with difficult people at work

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