Pump & Dump Stocks are Back! How to Trade these Penny Stock Manipulations
Is it True? Are Pump & Dumps stocks really back!? It appears so! Marijuana and Oil stocks trading on the OTC markets have been making crazy moves to the upside lately. Sometimes even up 500% in several days! We haven’t seen this kind of action in quite some time. However, this OTC market environment is not like the Pump & Dump scams of old from the late 1980s to about 2014. Two years ago I predicted this major change in the OTC market and I wrote about in the blog named “Is the Golden Age of Sub Penny Stocks Over? OTC Markets New Regulations.”
My members and I have been taken advantage of the newly active OTC markets everyday on Fous4Live. Fous4Live is a Real-Time HD broadcast where Members trade alongside the me and the #Fous4Team.
Checkout my trade on $MJNA near the end of this Fous4Live Session:
So what is a Pump & Dump stock? Let’s break it down:
Step 1: A company trading on the OTC or Pink Sheet market is usually struggling financialy or have some BS story they want to tout in order to drive up the price action of their stock so they can profit off of it.
Step 2: Owners of the company find a penny stock promoter who has compiled a massive list of emails and physical addresses to mail out propaganda materials with the “NEXT HOT STOCK PICK” and why you need to BUY NOW. Aka getting suckers to buy a stock because they don’t know any better.
Step 3: The OTC listed company pays the promoters; many times in actual shares of the company and even cash payments before anyone even knows about the upcoming PUMP of this stock.
Step 4: All of the sudden this dumpy stock that likely had very low volume gets mailed in front of a vast amount of people and the buying or PUMP starts. You see a massive spike in volume and a jump in the stocks price and this creates a chain reaction of more and more buyers wanting to jump on the bandwagon thinking that this is going to be the NEXT BIG PENNY STOCK!
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Step 5: The insiders and penny promoters are raking in cash as the share prices surge and they own shares at the very bottom. Being that the stock is typically low in liquidity they continue pumping promoting the stock so that they can continually create new buyers to release all of their shares too.
Step 6: The insiders and promoters just made millions of dollar in an illegal pump and dump scam. They discontinue the paid promotions and the new buying pressure is going. Leaving all the uneducated idiots stuck with shares at very high prices with no one to sell to. The selling demand becomes very high and this creates a panic of selling pressure and the stock drops all the way back down to where it started or even lower. The people still holding the share at the top are what we cal “bag holders” and have just learned hard lesson of what a pump and dump scam is.
Step 7: The penny stock promoters get caught by the SEC and have their millions of dollars seized and find a new boyfriend in federal prison named Bubba.
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Now currently we are seeing more of a sector wide hype move in the Marijuana and Oil Stock sectors. Penny stock pump and dumps are a scam yes this is true. But as traders that does not mean we can’t take advantage of them when we know the anatomy of how they work!
I’m sure you have some more questions about what we provide for you as a Fous4 Student. So check out this video as I detail the Top 5 Reasons Fous4Trading beats the competition! Check it out:
I truly look forward to finding my next big success story. But this is a team effort. I need dedicated and hardworking students who are ready today to put in the work needed to become a Pro Trader!