PostHeaderIcon How to Avoid Internet Investment Scams

One of the things that you have to watch out for whenever you’re trading online stock is the many different online scams that these con artists and scam artists pull off. One of the classics of online stock trading is the traditional pump and dump.

This is done with the use of different promoters who try to talk to investors about parting with their money to simply make money off the fall of a specific stock price. When you’re talking about online investments, you will probably hear of the Pump and Dumps sister, the Short and Distort.

This pertains to the "short selling" that is done by the scammers. What happens is the short selling happens when it is done by another investor who does not own the stock that he or she is selling. There are several stages of the "Short and Distor" scam and we’ve outlined them for you so you will be able to know when you’re being scammed and how you can avoid it in the future.

We have set out below, the various stages of the Short and Distort.

Stage  1: Research.

The short and distort scammer will find different stocks that might be overvalued and focus his or her attention on those stocks.

Stage 2: Short Sell.

When there is some slight of activity regarding a particular stock because of some bit in the news, the short seller enters the market with the intent of and selling stock (which he does not actually own) short

Stage 3: Rumour Mill.

This type of scam has a different type of approach. Unlike the scammer in the Pump and Dump scheme, the this Short and Distort scammer will now enter into campaign to weaken the worth of the stock that he is interested in. He eventually is able to make it sell short by spreading several rumors.

He accomplishes this by posting several negative replies or comments on a particular message board or chat rooms and several other newsgroups. This plan targets different investors and entices them to simply let go of their stock with the implication that people might lose money if they don’t let go of their stock in the long run. The tactic that revolves around this is inciting fear in the different investors instead of excitement.

Stage 4: The Cover.

The scammer will then buy some stock and will then have some of his fellow-scammers cross stock with each other so that people will notice that there is a great deal of selling that is happening right now which means that one should not hold onto the stock for too long.

Stage 4: The Loss.

The investor who once bought the stock at elevated prices, sold his stocks at a lower prices on the mistaken belief that the stock was worthless based on the distortion campaign.



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