Is There Such Things as Hot Stocks?
Is There Such Things as Hot Stocks?
Hot stocks are stocks that are currently highlighted in the stock market. These stocks have the best prices and return the best profits for the day trader that invests in them.
How To Find Hot Stocks
Hot stocks are covered by the different financial news services. These services maintain websites from which you can get information on the hottest stocks available in the market in the convenience of your own office or your room.
Some of these websites include:
- Reuters: A free financial news service whose coverage is worldwide. Under the business & finance section of its website, Reuters has a specific page for hot stock news.
- Bloomberg: The best and widely-used source for financial news.
- MSN: MSN has a Money section in its homepage which has news about the stock market and the most profitable stocks.
- Google: Google Finance has news, quotes and information about different companies around the globe.
There are a lot of websites aside from these four that offer information about the most profitable stocks that a trader could choose from. These websites can be found by striking a search for “hot stocks” using your preferred search engine.
Scams Using Hot Stock Tips
Since the introduction of mobile phone technology, there have been several scams using SMS messages, each with their own agenda and operation. Stock trading has not been spared. In 2005, the Financial Industry Regulatory Authority published a warning to be wary of fraudulent SMS hot stock tips.
Under this scheme, scammers send unwary traders an SMS message regarding a potentially hot stock that is supposed to blow up in price within the next 24 hours. Usually these messages promise a profit twice the investment if the trader buys the stock.
The true goal behind this scam is to induce a sudden rise in demand for the stock. Hot stock tips are essentially a descendant of the old pump-and-dump scheme. When investors who believe the tip actually buy the stock, the demand rises and so does the price. When the price reaches the peak, fraudsters owning the stock then sell them off to reduce the price and value. They get the profits, all the investors get are low-value and low-priced stocks, and a huge loss.
According to the FINRA, the fraudulent stocks are Pink Sheet-quoted stocks. These stocks are over-the-counter issue whose prices are easily manipulated by black hat traders.
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