Pump and Dump vs Stock Promotion
A pump and dump is a stock price that increases rapidly on hype and rumors, usually in the end the rumors turn out as false information. A pump and dump is a quick way to lose all of your money or make a lot of money if you are an expert at trading. Some experienced traders will buy a pump and dump to capitalize off the volume and inexperience of other traders. Money can be made as long as you understand to lock your profits and leave.
A stock promotion (also called investor awareness or campaigns) is when an insider holding shares or an employee of a company, pays for a stock to gain attention amongst the investment community. It is important to know that pump and dumps and stock promotions occur on all stock exchanges; whether it be as big as NYSE or as small as Pinksheets on the Over-The-Counter exchange.
Social media plays a vast role in trading; stock prices may fluctuate when traders share their interest and sentiment in a particular stock. Newsletters and blogs are also used to inflate stock prices, inadvertently stocks may also plunge using these media sources. Depending on the outlet or person being used for the promotion, it can have a negative impact on the stock.
A promotion can be through a well-known television network, commercials, and other giant media sources. It is normal to find a stock promotion in a newspaper ad, internet ads and news channels. Pundits of well-known investor channels and networks share their opinion on a particular stock and may or may not disclose that they were compensated.
When insiders are selling shares it must be enough people buying the shares for the stock price to increase or the stock will tank. Sometimes the position the insider is holding is not as large as the money coming in, this can result in the stock price going up hundreds of percentages, as there is more buying than selling. Not all companies that have a stock promotion are selling shares, some genuinely want their stock having investors attention-- although this is rare, it is possible.
As you trade more often, you will notice news being released daily on tickers and there will be no movement . At some point or another, every public-traded company pays for investor awareness or else not too many people will know of the business. This is generally known as advertisement, however in the stock market it's referred to as a "campaign or stock promotion." In order for any stock to move, it must have buyers and with no buyers the stock will not move. Advertising a public-traded company should increase shareholder value. Stock promotions do not always work out for the greater good and this is depending on the company and value it can bring to the market.
There are over 15,000 companies trading the OTC exchange and 4,000 on NYSE or NASDAQ, no one can possibly pinpoint and research every stock, therefore people... Login To Read More