What is a Pump and Dump?!…Everything you need to know!

The pump and dump scheme has been around for a long time and is a way to make a quick buck on others dimes. This type scheme can be found in penny stocks on the NYSE and recently more common and easier to accomplish on cryptocurrency exchanges. Maybe you seen the movie the Boiler Room? Well if you have you would know there is only one winner in this scheme, we call that winner the player. The player initially buys up all the cheap coins in the market for a couple of minutes, hours, days without drawing attention to himself. Once they are happy with the amount they will start promoting the coin. They promote the coin by talking on crypto forms, tweeting about how amazing this coin is, market anyway necessary in order to create a buzz and bring attention to the coin so others will start purchasing coins. Promoting the coin is what leads to the pump, people buy into the idea that this coin will be the next bitcoin or ethereum, or they can make a profit off it, this will drive the price up. Once the player hits their target price they will start to dump the coin, but not all at once because they want the price stable enough to keep people from leaving the market until the the player is out and has made a profit. After the player dumps all of their coins the price will start to plummet and people will start to panic sell sending the price to 0, a perfect pump and dump.


Now I said there was only one winner but that is not always true. If you can spot the signs early enough you too can walk a way with a profit. Spotting the player buying up the coins in the early stage before he begins to promote you will be minimizing your risk. The longer you wait to get in the higher the risk of the player dumping his coins without you noticing causing your self to be in a panic sell with no one buying your shit coin. Take a look at the example below of a pump and dump. GET IN AND GET OUT!Unknown

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