The Day Tradette

Master the Stock Market

How To Recognize An Investment Scam

You work hard every day to earn enough money so that you can invest it further. However, investment scams are becoming an issue for people all over the world. Even though you probably think you will not become a victim, crooks can easily find a way to trick you when you let your guard down.

Sometimes it’s tough to recognize the scams. Many of these vultures will try to tempt you with an inside deal, and they will do it as professionally as they can. But, some of them are also quite clumsy when performing their scams.

The scams come in all shapes and sizes, but the Internet makes them easy to implement. Thus, it is often difficult to tell what’s the real truth.

What are the scams?

You are probably wondering how you can recognize these scams. However, there are so many of them currently on the Internet, and it is somewhat impossible to track them all. What’s more, new ones appear every day. Still, here are some of the indicators you should be paying attention to:

  • A stranger is offering you an inside deal. The first question you should ask yourself is “Why is this stranger contacting me about an inside deal?” Why would anyone do that? What’s in it for them?
  • Someone is offering you a fantastic trading system that will, without any doubt, bring you a lot of money. These systems don’t exist. Besides, if somebody actually invented such a system, why would they share it with the world?
  • You don’t have to input passwords, and there are no secrets involved. This is a sure indicator that someone’s trying to scam you. Never pay for anything like this because you will never see your money again.
  • A stranger or a suspicious company is offering you an elaborate scheme. The scheme often involves offshore bank financing and even oil leases in countries like Uzbekistan. Nevertheless, you will earn a huge profit. But, the scheme is complicated, and you cannot possibly understand it. So, why would you invest in it? The crooks make the scams as complex as they can because they are counting on your gullibility. Therefore, you should only invest in legal opportunities which you can easily understand.

The “Pump and Dump” Scam

“Pump and dump” is a widespread stock scam that can make you lose money in a blink of an eye.

A group of scammers starts the scam by buying a block of stocks. The company they are buying it from is often small. Then, they go online and spread rumors about the company. They often say that the company is inventing some sort of breakthrough technology. Or, they say that they have just signed a fantastic deal that will make their stock price surge.

Sometimes they even go a bit further. The scammers might create a letterhead and send press releases. However, the company is often unaware of these happenings – but there were instances when the company was creating these rumors.

The point is to get the stock price to go up. Once it does, the scammers sell their block of stocks and earn a profit. But, their sale makes the price go down. Thus, the investors lose a lot of money.

Another version of this scam involves short sellers. However, instead of creating rumors about the company’s success, they spread lies. Therefore, once the stock price goes down, they can cover their position and make a huge profit.

Final Words

Even though there are many scams out there, it is vital to learn how to recognize them. Don’t get fooled by the promises – those high returns are nothing more than an evil scheme. Moreover, don’t let your greed blind you – invest in legal opportunities instead.

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