Pump and Dump

Pump and Dump is the name given to a scheme in which a stock, usually with a small float or low cap because they are easier to manipulate, is talked up and recommended in order to temporarily inflate the price of the stock so that someone who had a vested interest prior to the increase can sell that interest and make a profit. This scheme is illegal and those who are convinced to purchase the stock due to the falsely projected increase will generally lose money once the “dump” has taken place and the stock falls back to its original price or lower.


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