Pound foolish, and penny foolish too

Folks need to understand some key points about pump-and-dump stock scams before they decide to go the get-rich-quick route.

Pump-and-dump stock scams target micro and small cap stocks for a reason – lack of liquidity. These stocks generally trade at very light volumes, hence existing owners cannot sell the stock without causing the price to go down as there are few buyers for the unknown shell company. So, scammers promote the stock through sleazy (and illegal) marketing tactics. You then buy what they are selling. The sellers get liquid, and you get stuck with the stock on the back end.

There are no two ways about it, and trying to day trade a penny stock will get you cleaned out by even the lowest commission broker.

Best advice is to just stay away.

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