Common Crypto Currency Frauds and how to Avoid them ( 10% beneficiary to TFC)
Common Cryptocurrency Fruad and how to avoid them.
Introduction
It is a quite noted that despite the fact crypto currency has brought so many smiles on many individuals so has it brought a lot of sorrows to different individuals. It is why I want to take this opportunity to point out the different frauds we have in the realm in using cryptocurrency so as to be wise to avoid falling victims. Lets get started.
Scams from initial coin offering
Pump and Dump schemes
Market Manipulations
1) Scams from Initial coin Offering
Initial coin offering is a scenario in which we see the different projects giving out their tokens to the public at a very cheap rate. This is often done before the listing of this said token. This means, one must normally trust this projects before engaging in them as you are not totally certain that this tokens will be listed.
Some individuals use this opportunity fabricate tokens and deceive individuals by telling them it will be given to them at a very cheap rate. This is therefore, seen as they use fake technical whitepapers and technical teams. It therefore important to do a good research about a particular project before investing in them to avoind being taken advantage of.
2) The Pump and Dump Schemes
One schemes individuals use in the market is the aspect of pumps and dumps. This is mostly seen to be done by whales. A new cryptocurrency is created and a high volume is injected into the token. This causes the token to take a high trend which will cause many retail traders and other small traders to get into the trades.
After this small investors get into the trades, the whales or the individuals get out of the positions which leads to a dump and leaves the market with little or no liquidity for others to even exit their trades at a loss making them loosing everything.
This should actually be avoided by the usage of proper analysis of this projects and getting into this trades at the right time. This right time is getting at the level of the accumulation of the token.
3) Market Manipulation
I will be concluding on the aspect of market manipulation which is principally done by brokers and other financial institutions. An example is ECN Brokers. The ECN Brokers are known to be brokers who take trades automatically in an opposite direction to that of the trader.
In cases where a greater munber of users are predicting in a single direction, this brokers can inject a high volume to the market to make the market have a reversal.
It is always quite difficult in avoiding this types of manipulations as you do not even know when it does comes. The best way is setting your stop loss positions at stategic positions such as below and above support and resistance levels and not at the levels.
Conclusion
With the three illustrated types of scames in related to cryptocurrency which are the market manipulation, the pump and dump schemes and the initial coin offering scame; with the proper identification and the usage of the schemes which I provided, we can therefore avoid this scames.
We have several other types of crypto scames which I will uploading in the subsiquent articles.
Your explanations are really very important. Market Manipulation can be called as something that is often seen in the crypto market. So, that's why we need to identify the exact market trend before taking an entry.
You have posted with us a very important topic. We must be careful and aware of this. You have discussed some common Crypto Currency Frauds.
This topic is very important to know how to avoid any kind of scam in the cryptocurrency world.
I was hearing about Common Crypto Currency from a friend of mine. I got a good idea today. You wrote in a very beautiful way.