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Let’s see if a crypto pump and dump is just a scam or also a fast way to make profits when trading cryptocurrencies.
I will assume that you are familiar with trading in general, so you have probably heard about pumps and dumps scheme in this cryptocurrency space.
A pump is basically a scam and usually a group effort to pump an illiquid asset and quickly sell it to profit from it. I will try to explain to you above how this scheme works.
But first of all, can you make a profit? Hell yeah, if you are willing to risk a lot and if you are faster than Usain Bolt.
Will you make a profit from a crypto pump and dump? Most probably not. I strongly recommend you stay away from it and try day-trading instead. Check out this awesome article on Medium.
Let’s pump and dump crypto(low cap coin) on our members
Ok so a pump and dump only works when the group involved buys the specific asset a few days/weeks BEFORE they gonna call it in public.
Because, in reality, the creators already bought the coin beforehand at cheaper prices and are waiting for the group to pump it so they can sell it back getting a ton of profit in minutes(actually in seconds).
Although this scheme is a well-known scam, some people can still profit from it. We will show you an example later below.
Who is behind these schemes?
There are usually one or more telegram groups who are organizing these so-called pumps. You will find such groups also on some discord groups, but those are less effective.
Why? Simply because the volume is bigger with telegram since multiple large groups are pooling and promoting the event together.
The admins of those groups will alert users to buy a specific coin, usually a low market cap one, claiming it will skyrocket soon. Realistically, you(and the other people who will buy) will pump the coin and they will dump it on you. Smart move, right?
How to profit from a cryptocurrency pump and dump
Back in the days, I participated in a p&d and you can definitely profit from them if you are fast enough. I wasn’t. And I lost a lot. Actually, I didn’t even know that’s a pump signal and I was assuming it was just a regular short or mid-term call that random telegram signals channel I was following at that time.
Keep in mind that such an event will usually not last for longer than a few minutes, in fact, it can be seconds sometimes. The idea is to not be greedy and exit the trade as soon as possible with enough profit to not get burned.
Sometimes, a p&d can be significant enough to create some FOMO (Fear of Missing Out) and make other traders join which might prevent the asset from dumping as hard.
How to spot a cryptocurrency pump and dump call?
There are a lot of legit groups who are offering daily crypto trading signals but once per week they are preparing for next pump and dump coin event as well. How do you know that’s not a regular call? Simple.
They scheduled the signal at least one day before and they keep reminding every few hours about a big signal will come at a specific hour.
They don’t use the “pump” word. Instead, they use fancy names like:
Global Fomo Call
Mountain ALT Signal
Rock Bottom Whale Signal
TOP Gainer of Binance
Binance Titanic Signal
Strong TA Call
Binance Signal Event
Historic Signal Event
Mega Moon Signal
Examples of such calls:
“Our next GLOBAL FOMO CALL scheduled for today at 4 pm GMT, as the ALT market is on fire & more than ready for a new FOMO call. This free for all call will be big. We expect 2x+ spikes and we actually expect a big second wave this time. BE READY! 20 big WHALES are again working with us but this time with a different strategy to bring in all the global FOMO and we believe that the spike will be 2x for sure. BE READY!”
Sounds like you could make a fortune right? Lmao.
Let’s see an example
There are literally hundreds of Pump and Dump groups on Telegram. I happened to be using ‘Crypto VIP Signal’ but you can definitely find others as well.
Also, as I already noted above, dozens of such groups are pooling for the same signal at the same time so you need to check each one individually and see which one post the coin faster.
Because every second counts!
The signal was about Viacoin (VIA) against Bitcoin on Binance. The event was set to a few months ago(May 29) at 16:00 GMT on Binance and it definitely did.
Anyone can check these pumps if they go back using Binance or even Coinmarketcap
Ten seconds before the official event hour VIA start moving up slowly (pre-pump) from 1800 to 2300 sats and right after, at 16:00, VIA saw a huge price surge. It went up almost 300% until it peaked at 5200 satoshis.
The coin didn’t crash too hard either so anyone that got in as early as possible profited from the trade. This is just one example of many.
IMPORTANT: If you don’t have solid experience with trading don’t even think to go into pumps. You may go broke, faster than a speeding bullet. Better try to multiply your cryptos by following some quality trading signals. Check out this guide.
Pump and Dump strategy, positions and stop-loss
This, however, doesn’t mean you will always be able to profit from a P&D and you should always set stop losses as fast as possible in case of a sudden crash. The best way to profit is to set split your position into a few sell orders to the upside.
The calls will usually have one or a few price targets so you can follow those. I would suggest you place yours a bit lower, just in case.
I would also suggest setting a stop market order if possible as crashes can be quite violent. If you can’t set a stop market order, at least ensure your stop-limit order has enough space between the triggering price and selling price.
For instance, if I want to sell an asset at $100, I would probably set the triggering price at $105 or even higher. The higher it is, the safer you will be.
P&D Frequently Asked Questions
I’m sure you still have a ton of questions about P&D so we will discuss the most common questions below.
How to spot a pump and dump before it happens?
You can’t. Simply as that. There’s not such thing as a detector. Pump and dump detection tools based on AI and machine learning are not a real thing. At least for now.
The whales are accumulating little by little the coin who is getting to be pumped. So no large buying orders, no footprints, and most probably the coin is chosen in the event day(because of the market).
Is crypto pump and dump illegal?
Yes and no. The crypto market is still mainly an unregulated market which means there are almost no rules and a larger tendency to attract illegal practices. Pumps and Dumps of securities are considered fraud, however, the SEC has not made any definitive statement about cryptocurrencies, and most of them are not even considered securities.
But we don’t recommend you go into P&D’s. Better safe than sorry, right?
Who is Behind these P&D Groups?
Anyone can be behind such a group although most likely they will be investors and traders with a good amount of money already. They using telegram or discord to gather a lot of people then organize the event and the rest is history.
How Can I find Good Pump and Dump Channels?
Doing your own research is definitely the best way. What I usually do is find 5-10 PnD telegram groups and join them. I do not enter any trades, I simply observe and check if their calls or past pumps are profitable.
Many p&d groups are total scams where VIPs and other premium members will get the calls a few minutes before the rest and will force you to enter the trade when the coin it’s already up. This heavily tilts the odds of success against you.
Can I personally Create a P&D Group?
To create your crypto pump group, you will either need a lot of money or investors with a lot of money to help you. Then you will need to build a community big enough to be able to pump low volume coins on big exchanges(Binance, Bittrex, Bittrex).
Once you have the money and the people, you can easily start pumping low-value coins as they are quite easy to manipulate.
Although Pump and Dump schemes are not entirely illegal right now, you should still be careful while participating in them. It is definitely safer to simply participate than run one.
Additionally, if you actually want to profit from such events, you will need to automate your strategy and be fast. Researching p&d Telegram groups beforehand is crucial as most of them are outright scams.
I don’t personally use such strategies as it is extremely time-consuming and requires you to be online almost 24/7. Also, I consider more safe to day trade using these kinds of signals.
But yeah, there are still dozens of pump and dump cryptocurrency groups out there and I think they will die only when the crypto market becomes regulated.