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Stock market scam alert। stock market for beginners।

                Many scams,frauds are happened everyday in stock market. What is the stock market scam and how can you save yourself from these scams? The article informs you about three major methods of stock market scam and some ways. These ways helps you to keep secure from stock market fraud. 

Stock market scam alert। stock market for beginners।

The main three stock market scam that are discussed below are

* Chain Marketing Scam.

* Penny Stocks Scam.

* P&L scam.


•Chain Marketing Scam:

               Firstly you should know what is chain marketing scam and how are the chain marketing scams occured with investors? Suppose a fraudster gets a email list of 1000 people from somewhere. Now he divides the email list into two group and both of the group have the email list of 500 people or investors. He informs first group or 500 imvestors that now ITC share price is 170 rupees but next month ITC share price will increase so you should buy now. And he tells second group or other 500 investors that now ITC is going on 170 rupees/share and next month it will decrease more so you should sell now. Now the share price of ITC obviously is either going up or down. The exact share price does not remain. Imagine next month share price of itc goes up. So the first group of 500 people that was informed before that itc share price would increase think that the service is good and accurate. And the other 500 investors whom he told itc share price would decrease will not send more email. 


         Next month he divides the group of 500 investors whom he gave right advice into two groups and each group have 250 people or investors. And the same thing happens again. He advices first group of 250 people that next month share price of itc will increase so you should buy now and advices second group of 250 people that next month itc share price will fall. Next month itc share price will go either up or down. Suppose next month share price of itc  increases. The first group of 250 investors whom he give right advice for two times think the service is good and faithful. 


          Now to establish a strong faith on the mind of investors he again divides the group of 250 people into two groups and each group have 125 investors. He again advices one group about the increasing of itc share price and other group about the falling of itc share price. Suppose again share price increases. Now after three months the group of 125 people whom he give right advice for three times think that the service is absolutely good,accurate and faithful. They think also if there is someone who know the prediction of stock market then it is he. On fourth month he will tell the 125 investors that if you want the right and profitable advices from him then grab his service of 40,000 rupees(it may be more or less). Now most of 125 people who get the right advice will take the advisory service paying the huge fees. And when they do payment they understand that they fall in the trap of fraudsters. The tips now start to fail. The reputed and big advisory company never give any free tips. Because share market does not run in this way. Because it is impossible to predict right always. So if someone or any advisory company tells that they give accurate advices then you should understand that there is either problem or will create problem. For this SEBI issued recently a circular that banned the advisory services to give the free tips. But many people or companies give free tips now. Be aware of these free tips. you surely understand the chain marketing scam. Now it is the time for discussing next stock market scam alert.


•Penny Stocks Scam:

           Penny stocks scam is one type of share market fraud. Penny stocks means the stocks of 10 paisa,20 paisa,1 rupees etc. New investors who have not usually more rupees or other investors who invest only for experiment have the greed on them of more quantity of stocks. Such as if someone buy stocks of 1 rupees then he can buy 1000 shares of the stock in 1000 rupees. And if the share price goes to 3 rupees then their investment will increase for 3 times more. Only for this greed many young or new investors attract to the penny stocks. Let's open the secrets of penny stocks. 


            If any stock comes to 1 rupees from their ipo value then there is surely any problem for that the share price of the stock is decreasing so much. Market is no blind. There are many investors who have the experience of stock market more than about 50 years. If the company is valuable then its share price will automatically increase because of the high demand of its share buying. In spite of being experience investors new investors get the valuable stocks in low price and it will increase four times more. It is quite impossible. If it may real or the stock have any value then hni or mutual fund etc calculate its value many times ago. Let's discuss how the penny stocks are manipulated?


           Penny stocks are the low liquidity companies that have not more demand of buying or there do not happen more buy or sell order of the stock in stock market. So if some buying order comes to stock market for the stock then everyone can see fluctuation on the stock. Suppose someone is fraudster and his main work is to do fraud in stock market. He goes to a penny stock owner and tells him that both of them don't earn good so he(fraudster) have a plan to earn. They publish some good and positive news like the company is going to deal with a big foreign company etc on two or three newspaper through any agency. Then the owner of the penny stocks starts to buy the shares of own company from market so that a positiive news bursts in market that the owner of the company buy the shares from market then something will happen good with company. Normally the stock have no more volume and then the promoter buy its own stock's share. For this a scarcity of the stock is created in stock market. No more selling stock in stock market and on the other hand the good news about the stock will increase the demand of buying the stock. Now the shares that is left in stock market will trade in high share price. Because few shares are available in stock market. Such as gold,diamond etc are so precious because of the lack of it. In this way its share price will be increased through aritificial scarcity of the shares of the stock. Retail imvestors see that the stock reaches to 5 rupees from 1 rupees in one month. It means the stock give 500% return in one one month. They think it will increase more. So they start to buy it. In this way many retail investors start to buy it. For this the buying demand and share price will increase in stock market. And then promoter of the stock sells his shares with the fraudster in stock market. The shares are bought obviously because of high buying demand by the retail investors in that thought that it will increase. But after this share price does not increase more because any good things does not happen with the stock. After one or two month the share price starts to fall. And the stock's share price touches again 1 rupeez. So retail investors buy the stock in high valuation and sell the stock in low valuation. And on the other hand fraudsters with promoters buy the stock in low valuation and sell the stock in high valuation. For this many investors have to face the losses. So you should keep distance from the stock. And as a investor you should invest in quality and fundamentally strong stocks like ITC,HUL,HDFC bank etc so that its promoters or owners think about their shareholders. The promoters of companies that are customer focused try to generate wealth for themselves or shareholders. Because they are doing business. Their main purpose is to serve customers and make the company large not to do fraud. So you should find the undervalued quality stocks to invest in it. 


• P&L(Profit & Loss) scam:

            Now it is going huge on social media that someone uploads p&l screenshot of 1 week or 1 month and says that he earns huge profit in little time period and the screenshot is his proof and so if you want to earn please subscribe him. It have two problems. The first problem is that these screenshots may be made in photoshop or other graphics software. It is very easy to change the huge loss into profit using the software. So these screenshots are not faithful. Anyone can't loss always or earn always in stock market. Now suppose a trader does loss on 1st may to 15th may and earns profit between 16th may to 31th may. So he obviously uploads his profitable p&l statement. So when he earns profit he will upload the p&l screenshot and when he faces to loss then he will not upload the p&l statement on social media. It is the second problem. So you should not trust on these services. Now let's discuss about the methods to save yourself from stock market fraud.


I.           If you want to get tips of stock recommendation from any stock advisory agency,whatsapp group,youtube or telegram group etc then ask them whether they are SEBI registered. Because any agency or group that give tips,recommendation or analysis should be sebi registered according to the guidelines of country. So you can ask them if you are so expert in stock market then register yourself with SEBI giving two simple exams and doing some paperwork. It does not mean that any agency that is sebi registered can't loss ever. But if the firm is sebi registered then there are sebi audits,compliance process etc so that sebj give guarantee that the firm is not closed their function or don't run any scam. It may be that they pick wrong stocks and they can loss but their intension is never to do any fraud. Because many regulatory bodies examines the sebi registered agencies. So check the agency or any social media group whether they are sebi registered. Another factor is that any advisory agency is sebi registered in one name and gives service in another name. Such as you take service in sebi registered PQ agency and the sevice bill comes from EF advisory agency. It should not happen. 


II.         If any trader,investor or advisor wants your demat account id and password saying that give your id,password and deposit money in your account and they will do trading from your account and earns profit. Keep distance from it. It is fully illegal. Any reputed good advisory sevice does not want your account's id,password from you. Any advicer or stock market influencer is not allowed to want the id,password of any client's account. It is very risky. Don't share your id,password of your account with any advicers or your broker. If you have demat account on upstox and upstox wants your id,password yet you don't these with your broker


III.    If any traders or advicers tells you to transfer the trading fees in their bank account and they will earn profit doing trade for you. Run away from him or agency. It is also illegal. An advicer can only tell you what stock you should buy or sell. Without this all the above things are illegal. 


IV.      If anyone promises you to give guaranted returns on f&o,commodities,equities etc then anything is not simple than it to understand that you should keep distance. Any reputed,regulated advisory service does not offer guaranted returns. Where world biggest investor,Warren Buffet fails 3 times amid 10 times in stock market there how anyone can give guaranted returns? If they say that they will give service if they open demat account with this broker then it is a dangerous sign. Certainly they have any relation with the broker.  They will trade huge in your money and generate huge brokerage fees so that they can share the brokerage fees. 


          If you have any query related to stock market fraud please comment below so that the topic can be covered.


Best wishes to invest.



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