Sources of Penny Stocks Scams

Penny stocks persistently become the victim of dishonest pump and dump schemes. Some fraud companies adopt these schemes to make money from you. By this scheme, they give false or misleading statements to upsurge stocks. This is called "dumping" on the public at overstated prices. These schemes are carried out by telemarketing and Internet fraud. There are other such plans whose sole purpose is to deceive people. There is also chop stocks scheme, where stocks are bought for pennies and sold for dollars to abroad or domestic retail investors. By this both brokers and stock promoters get huge profits.

The brokers usually get their payment "under the table" secret payoffs to sell such stocks. The focus stocks as a rule have low or no liquidity earlier to the block purchase. After the block is bought, the firm's sharing brokers will sell the stock to their brokerage customers at the then-current quoted ask price. These are bought by often victimized investors who are generally unaware of this practice.

Fake brokers and companies use a variety of ways to prop up fake penny stocks that are employed by them. Usually penny stocks scam are made by spam e-mails, fake or misleading press releases offered by the company, and junk faxes that advertise absurd and fake claims, dishonest newsletter writers who support a stock for a fee, paid posters, or foreign buyers all to drive up the share price while the insiders sell. These stocks from unknown source often prey investors.

By getting hassles of tracking and making computations for many penny stocks categories, it is possible to get the best of them. There are also stock filters or stock screeners to assist with the job. By this you can have the opportunity to filter through thousands of penny stocks investment. It will allow for an initial list of hot stock list. Stock filters are only tools to make decisions and, hence, should not be used as the be-all and end-all of how to trade penny stocks for massive profits.

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