What is a Pump and Dump Scheme in Trading?

Friok

  I've been warned about "pump and dump" schemes in stock and crypto trading. Can someone explain what they are and how to recognize them?

Dyvk

A pump and dump scheme is a type of market manipulation where investors inflate the price of an asset through false or misleading statements (the "pump"), and then sell off their heavily inflated holdings at a peak price before the hype dies down (the "dump"), leading to a sharp price fall. This misleading signal can lead investors to buy into the security thinking the market is on the rise, only to get trapped with losses when the prices fall again. Recognizing these schemes involves watching for unusually fast price increases followed by rapid declines, often accompanied by high volume and promotional hype. For an in-depth exploration of pump and dump schemes, how they occur, and strategies to detect and avoid them, this article offers valuable insights: https://paybis.com/blog/glossary/what-is-a-pump-and-dump-scheme/  It details the mechanics behind these schemes and protective measures investors can take.