Definitions

Pump and dump schemes are a type of market manipulation in which an asset is bought up in order to raise its price.

The rise in value attracts other traders wanting to benefit from the move, who also buy in, raising the price even more.

Eventually the perpetrators of the scheme dump their holdings at the new inflated price and everyone follows suit, dropping its price back down to former levels or even lower.

Latecomers to pump and dumps are the ones who lose the most as they tend to buy in at the most inflated prices.

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