How to recognize Pump & Dump?
How to recognize Pump & Dump when there are so many trading recommendations from successful and influential traders around? In this article, we will analyze how to understand that you have a natural growth of a crypto asset, and not a pump signal.
All pumps have common features, so experienced traders share their knowledge of how to recognize Pump & Dump. Consider the main indicators indicating the cryptocurrency pump.
An obvious sign of a pump for all users is a sharp rise in cryptocurrency. Nevertheless, our task is to figure out what previous indicators may indicate the beginning of a pump.
First of all, one of them is a significant increase in trading volume. Even when it occurs without a significant appreciation. If it is not justified, that is, it is not confirmed on the official website and in the social networks of the crypto asset team, this is an obvious sign of an impending pump.
For example, if the number of transactions with cryptocurrency is justified, then in social networks and project development documents (WhitePaper, Roadmap), we will find confirmation of it by events and their dates. Otherwise, growth can be considered unjustified.
Therefore, this should already alert the trader. First of all, you need to understand that there is an artificial inflation of the price with false information. Often such information is presented by the pump organizers as insider information. Also, large buy and sell orders often appear at certain stages of the Pump & Dump scheme.
It should be borne in mind that changes on the charts are easier to track under a short-term pump. In this case, both the growth in trading volume and the growth in the value of the asset will be noticeable. In turn, long-term pumps are harder to track.
These indicators will look more or less natural. In this case, you need to carefully study the information background and analyze it. You need to compare official sources with information in the channels and groups in which you are. This is where chart analysis and information analysis come in handy.
It is also necessary to look at how the crypto asset behaves on different trading platforms. As a result, you can compare the indicators and how comparable they are. As a rule, “whales” conduct pumps on one exchange.
How to be safe with Pump & Dump
Here advice and psychological nature, and logical.
First, don’t fall for the “lucky chance” because in anticipation of a good profit, many people want to take risks and make quick money.
Secondly, do not buy large sums of one asset. Be sure to spread your portfolio across multiple cryptocurrencies. Make a purchase for the amount that you are ready to lose.
Thirdly, it should also alert you if you are being agitated to buy a crypto asset on a particular exchange. This campaign can simultaneously take place in exchange chats and on cryptocurrency forums.
Sometimes a newcomer or even several newcomers appear in your favorite old Telegram chat, who actively begin to campaign for the purchase of one asset. Treat such messages critically.
Your best defense against scammers is your critical thinking and careful thoughtful action. Your enemies are greed and greed