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Stock tips and recommendation scam.
Stock tips and recommendation scam is widespread globally and most found fraud in Stock market. Lack of knowledge about this scam made many investors lose their money. Do you ever thought about why some people provide stock tips and recommendations for free of cost?. Consider in all areas, Can you get any quality products or services for free?. Not in any circumstances. But you can notice many websites and social media platforms provide free stock tips every day.
Also Read: The Rule of 72 – predict when your money will be doubled
Trial Plans to make people believe them.
The fraudster develops a website(social media platforms too) and provides stock tips daily. Fraudsters temp you that their research can predict the price movement with 99% accuracy. And convince you can make a profit of 50% per month. To believe they offer a 3 or 4 days free trial for intraday stock tips(But many good companies deny for free). Fraudsters purchase the email and mobile number of Demat account holders.
Consider 10,000 contact details are purchased. Mohan is one among the 10,000 people. Each day a single trading call is received through SMS. Here is the Process
First trial day.
On the First Day, the fraudster selects a Stock ABC, sends a message to buy the stock. As per the tips, the price of the stock increased, and Mohan booked profit. And now he is confused about whether to believe, or it happened on luck. Anyways, three more days of free trial days available for Mohan to decide.
Second trial day.
On the second day, Mohan received the tip as ABC price will fall. Mohan is feeling wonderful because, as per the tip, the price of ABC comes down, and he booked profit. Mohan now started to believe slowly in the recommendations.
Third trial day.
Mohan is eagerly waiting for the third-day tip. Mohan received the tip message as ABC price will fall, and so to sell. Though the market moved up, as per the stock tip, the ABC price comes down. Mohan booked profit and the consecutive day’s accuracy made him believe the fraudster’s words of making 50% profit per month. You all know about Warren Buffet. He has got a 22% annual return yearly to become one of the wealthiest people. Then imagine about the wealth of Mohan if it happens 50% return.
Fourth trial day.
On the fourth day, the tip is ABC price will go up and to buy. Based on the correct prediction for three consecutive days, Mohan invested a higher amount on the final day. The share price increased as per prediction, and Mohan booked a profit. Now he decides to follow up on the tips at any cost. And he bought the paid plan even though it is high and imagining about his future success.
The Paid plan accuracy.
The free trial plan gives Mohan profit with 100% accuracy. Then a Paid plan will do wonders was the expectation. But there is an issue with the paid plan 3-4 tips are only working out of 10 recommendations. Now Mohan is disappointed with the tips, and he started to lose his money. Later he realized he got trapped in the stock tips scam.
How the scam works?.
Initially, the fraudster bought 10,000 people contacts and divide them into two groups. On Day1, there is Group A of 5,000 people and group B of 5,000 people. Now “Buy” call is send to group A, and on the same day and for the same stock, the “Sell” call is sending to group B. Either the stock price will move up or go down. A volatile stock is selected to make sure the price will not remain the same. Now it is clear the stock tip is successful for 5,000 people. If the stock tip is successful for group A, then the stock tips to group B are stopped.
Now on Day 2, the same process is repeated. Divide the 5,000 people into two groups, each consisting of 2,500 people. For group A, the “Sell” call is sending, and for group B, the “Buy” call sending. If the price goes down, then the tip is correct for group A of 2,500 people. On the third day, the same process continues ad stock tips are perfect for 1,250 people. On the final day, 625 people will get the correct stock tips. These 625 people received all four days’ stock tips correctly, and Mr.Mohan is one of them. If you need to improve your knowledge about the Indian stock market, then this book How to avoid loss and earn consistently in the stock market by Prasenjit Paul is highly recommended.
The target of the fraudster.
These 635 people are the target for the fraudsters paid plan worth Rs 20,000 for six months. Because of the magic created by four days of the free trial plan, suppose 200 out of 635 subscribed to a paid plan 200*20,000 = 40,00,000. A Fraudster can earn 40 lakhs easily with 200 people. Knowing about this scam will prevent people from losing money.
