Penny Stocks and the “Pump and Dump” Pattern
Penny Stocks and the “Pump and Dump” Pattern
📚 Penny stocks are shares that trade at a very low price, generally below $5 per share.
📖 These stocks belong to companies with a small market capitalization, meaning the total value of all their shares in the market is relatively small.
📊 The “Pump and Dump” is a common pattern in the penny stock market where stock prices rise rapidly and then fall. This pattern develops in 7 steps:
1-Pre-Pump or Promotion: The stock begins to be heavily promoted.
2-Ramp: The stock price starts to rise.
3-Supernova: The price reaches its peak.
4-Cliff Dive: After the peak, promoters and early investors begin to sell their shares.
5-Dip: The stock falls significantly.
6-The Dead Pump Bounce: After the initial drop, there may be a small bounce in the price.
7-The Long Kiss Goodnight: Finally, the stock stabilizes at a low level.
📚 Penny stocks are shares that trade at a very low price, generally below $5 per share.
📖 These stocks belong to companies with a small market capitalization, meaning the total value of all their shares in the market is relatively small.
📊 The “Pump and Dump” is a common pattern in the penny stock market where stock prices rise rapidly and then fall. This pattern develops in 7 steps:
1-Pre-Pump or Promotion: The stock begins to be heavily promoted.
2-Ramp: The stock price starts to rise.
3-Supernova: The price reaches its peak.
4-Cliff Dive: After the peak, promoters and early investors begin to sell their shares.
5-Dip: The stock falls significantly.
6-The Dead Pump Bounce: After the initial drop, there may be a small bounce in the price.
7-The Long Kiss Goodnight: Finally, the stock stabilizes at a low level.
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