Penny Stock Scams

There are many people who’ve unknowingly become victims of penny stock scams in their life. The end is losing a lot of money and repenting later on. There are many ways to keep away from these scams. The beginners should avoid disclosing their personal information to the marketers and brokers. The investment history and balance sheets must be privately handled as the information can be misused in any way.
Penny stocks should be taken only after full research from the market. The full information about the companies you choose for investment should be considered. Some brokers are so convinced that they will provide fake sheets about the penny stock companies to lure you for the purchases. Brokerage firms are also meant to attract the innocent investors and attract them to earn high in a little amount of time. The first step must be to check if the brokerage company you’re choosing has the authorization to carry out transactions within the state. It will help you in taking the first right step in dealing with micro-cap stocks.
You must keep records of the companies in which you want to invest. The information can be obtained from your broker for the notes on the company and take secondary opinions on the financial moves to be taken. Common sense is to be necessarily considered while making decisions about the investments. Proper information will make you take the decisions wisely and you will be able to get answers to all your problems easily.
Some penny stocks in the market are worth your investment. Although there are many risks involved but giving chance to the genuine new ventures is also a positive aspect. Three major things to consider while choosing a right penny stock are:
• In-depth research
It is very obvious but people miss this important step. It is vital to make sure that the company in which you are investing has real operations. There are many companies having big names but aren’t actually present. Don’t trust the news or advertisements and use your own mind to make money into the right company.
• Buy listed stocks
Make sure that the penny stocks you are purchasing have a presence in the listed exchanges like AMEX, NYSE or NASDAQ. It will reduce your probability to lose as OTCBB and pink sheet stocks are highly unreliable.
• Trading with best brokers
It is very important to get associated with the right brokers to make your investment. Trade with a reputed broker and reduce your chances of getting cheated. The right brokers will even intimate you if you are going on the wrong track for investments. There are many small and unethical traders who will always charge you more for the stocks or give you an option of low brokerage cost. It is your responsibility to be a smart investor and make the right choice by checking the reviews of the broker with whom you are going to get associated. Penny stock scams can be avoided only by the smart moves of the investors.
Article 2:
Penny stock frauds
Penny stocks are riskier than the other trading options. The lack of liquidity and financial reporting are the prime factors in making these stocks highly susceptible to frauds. There are many schemes floated by the clever manipulators of the market and they dupe the investors by taking all their money with the scam techniques.
The commonest fraud by the penny stock scammers is that they buy their own company’s shares in huge numbers and wait for the stock price to go up. The buyers get an idea that the stock prices are going up and so is the company’s status. Taking the benefit of the increased price, the fraudsters sell it at an inflated price and club a good amount in their pocket. This results in the loss of the poor investors and they lose a big amount of their hard earned money.
Penny stocks become worthless as the investors lose their money and scammers are benefited by the frauds. This gives a risky edge to some of the good new companies willing to gain market capitalization to run their new businesses. The investors need to make sure that the companies they’re choosing for the investment are actually worthy and have real existence.
There is a new way to fraud the investors. This system is being implemented overseas and the investors have the cheap penny stocks. They obtain your credit card details and start purchasing these stocks on your credit card. This is the process of buying their owned penny stocks through other credit cards by getting a huge profit and leaving them with huge numbers of valueless stocks. The ratio of this fraud is low but it still happens in many overseas cases. The money will disappear within a fraction of seconds and at times, the investor doesn’t even get a chance to do anything about it.
You can pick up the stocks by making full analysis and it will lead you towards building profits. Penny stock market is volatile and the liquidity levels are quite higher. There are enough movements in these stocks and it becomes difficult for the investors to find out the best stocks from the list of thousands of micro-capitalization shares. You can pick up the quick gains for yourself and get the best out of your efforts to reap the benefits from your investment.
‘Pump & Dump’ is the penny stock fraud which is very common among the people. The company will buy a penny stock and promote it on different platforms. When people invest in it and the price is high, the manipulators suddenly sell off the shares when the price goes up and consequently, the price of the stock goes down. It is the way to get all the money of the investors and befool them by making them purchase the stocks and suddenly drop off the company.
Penny stocks have low market capitalization and the investors need to think many times before making the right purchase. Stop losing your money and make your account better by choosing the right stocks in your investment portfolio.