Pumps and Dumps simply explained

Crypto currency market is highly volatile due to its young age, but that is fine as long as its a reaction to some good or bad news affecting the market. What could drive the price very low is for example a country banning crypto, some exchanges got hacked , some lending platforms closed, some ICO scams here and there or some banks getting upset.

Then you will understand how prices could jump up in the same way reacting to some good news like ...
Actually there is not a lot of good news in the space that could drive prices high in the short term.
People very often do not investigate why a coin price goes high, because for them it is likely will or must go higher in the short term, therefore its the right moment to ride the wave. Unfortunately 1 day later, the price goes down driving them to panic and sell, this is called a pump and dump trap.

It is a well organized group of people who buy at the same time and later when there is a high volume of new people starting to buy, they wait until the price goes very high and then they sell immediately. These groups proliferate in the social media like telegram and discord.

First of all, whatever one can gain from these groups is actually nothing more than the money lost by people who bought thinking that the price will go higher.

How it works is basically 1 group (3000 people or more ) admin will send a message to the entire group to buy a given coin at a given time from a given exchange.
The problem is that the group admin has already bought the coin before announcing it to the group. At the moment the group receives the message they all jump in and start buying. Meanwhile, the group admin sells his coins and that's it .

In short, 99.9% of the group members lose their money in addition to people who are outside to the group. In order to make a profit you have to be able to buy and sell within 30 seconds, otherwise you lose your money.

But how can you find the coin by its name and then place an order in so very short time? not only that, they often as part of the trick ask you to buy it at some given price like 5719 stoshis ( 0.00005719 BTC). The time to type in all the numbers, the price has already doubled, so you place a market buy (because you are confident , it is your pump and dump group ) and the time to place a sell order the price has already stagnated or dropped significantly. Most of the time people get disappointed and will cut their losses selling at lower price.

But the group admin has more to offer : "pump signals". It is basically that you get the information about the coin that is going to be pumped 5 seconds before it gets broadcasted to the main group. All you need to do is to bring more people to the group via referrals. It does not end there, If you are not able to find referrals, they can sell you some. As some people willing to get these "pump signals" at any price they will drop referral links everywhere and that is how the group population gets fresh blood continuously. Others after dropping referral links end up buying some as it is quicker than waiting until people click your link and join the group.

Some people to not get trapped buy all coins that have not been pumped yet and place a sell order with 100% profit or so and wait and hope that one or all coins get pumped. But that is a hard work, as you need to identify which coins are likely to get pumped and you need to find the exchange where the pump happens frequently not mentioning the amount of money required to do so.

Another type of pump and dump comes from the Initial Coin Offering. Basically the ICO starts selling at very cheap price for a limited quantity of tokens . The problem is that the ICO token selling was done during various rounds and each round the price was higher that the previous round. For example it starts at $0.10 for round 1, then $0.5 and so on. When the token is sold out, all other people who missed it , start buying it due to the fact that it is a fresh coin or it is a promising technology and the price will go up very soon . Few days later the price drops significantly due to a high sell made by those who participated in the ICO and people end up cutting their losses selling at lower price.

If you are wondering which coins got pumped last 7 days, all you need to do is to marketcap.com and click on the right top column named "%7d" to get the table filtered by the big pumps .

Please share this information so that other people don't lose their money.