you mean to tell me, enough suckers buy the stock from a newsletter posting to throw the price up?
or is it buyer support..the promoter or pumper buying alot of shares in a short time frame to attract momentum traders?
4 Responses to “how does a penny stock pump and dump work?”
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To answer your question- Both.
Buying drives the price up.
Those pink sheet stocks have little to no volume in the marketplace, so one alone can generate enough volume to drive the share price up.
Yeap.
Penny stocks are very sensitive. When you buy a huge number of lots, the price will be affected.
So most people will buy it together in huge lots "pumping" the price. Then something happens… people who are not involved in this realize the price is soaring, so they jump in too… causing the price to soar even further.
There are many other factors too. It’s complicated.. but is it illegal?
only gamblers and idiots buy penny stocks
Buy lots of shares in an uknown , illiquid OTC stock (like pink sheet)
Write glowing article, suggest stock is applying for better listing or just lie that it has been approached by a major company or invented a cure for cancer, whatever. Send emails to thousands of primed punters.(PUMP)
Watch price go up due to mug punters buying.
Sell original shares into the buying. (DUMP)