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Pump and Dump Frauds in Penny Stocks

Penny stocks are great investments and if you have subscribed to their best picks, you will get a lot of emails from the related companies. There are many people who claim that they’ve lost a lot with penny stock investments. On the other hand, there are some good stories about getting great returns from these stocks. You can grab some good stocks to get better ROI and it will actually lead you towards a lifetime opportunity to earn from the best companies available. There are many stories related to penny stocks and the investment of a few bucks has earned hundreds of extra dollars to people. The main issue with penny stocks is that they don’t have high liquidity and most of them are having low volume for trading. This makes the shares get weaker in position and they can’t be retained in any way. Penny stocks are not listed on major stock markets and are included in the pink sheets or OTC boards. Penny stock trading is profitable and you will get them through trading agencies online or even through offline brokers. There is a big problem associated with penny stocks. There are some fraudulent dealers who make fake companies and float their stocks in the market. The stocks are highly promoted through free newsletters and advertisement on web. The stock is bought on recommendation of the newsletters by many innocent investors and the value of shares is pumped virtually. The penny stocks jump to higher position according to prediction of dealers. It soon gains the position where it was predicted and all of a sudden, the market dries up and the stocks drop like a huge rock is collapsed. This takes all the money of investors and creates a huge disappointment. This is basically termed as Pump and Dump scam, which is very common and disappointing for Penny stock investors.