Is It Possible for an Ordinary Trader to Earn Money on Pumping?
What is pumping on the cryptocurrency market?
The very first word in Pump&Dump already explains the essence of the scheme - a sharp artificial increase in the price of the coin. Everything is extremely simple - the pumper, using its enormous resources, creates the conditions under which the coin's value rises. Created artificially the excitement spurs the activity of ordinary traders.
Math looks like this:
- There is, for example, a coin, which today costs 1 USD, is unexpectedly bought for the market by a pumper in the amount of 100,000 units. This necessarily increases its market value, because the purchase of a cryptocurrency in such quantity affect the activity of smaller traders.
- Traders can be shaken up and by creating a variety of informational occasions that are real or fake. The simple task is to make sure that the maximum of investors believes in the forthcoming increase in the price of the cryptocurrency.
- As a result, for example, the coin became 10 times expensiver. This is an excellent opportunity to sell recently bought one hundred thousand coins at 10 USD.
- The profit of the initiator of pumping is easy to calculate. It will be honestly earned a day a million USD. Where did he come from? From the thin wallet of all the "hamsters."
Which cryptocurrencies can be pumped? Theoretically, any. But bitcoin and coins from the TOP-10 with a multi-billion dollar capitalization are hard to pump. There are too many users and for pump at least several million USD is neeeded. Therefore, the object of pumping can choose coins less popular, with the following characteristics:
- The capitalization of the cryptocurrency shouldn't be high;
- The coin must show a long-term flat price;
- trader must use technologies for the creation of an agiotage on the exchange/market;
- The coin shouldn't have a negative history.
It's easy to conclude that pumpers prefer a cryptocurrency that wants to break into TOP of crypto market, which few people know or have forgotten. However, crypto whales often create fake news and spread info about the cryptocurrency.
Pumping takes place on exchanges, such as recently distinguished Bittrex and Yobit. However, Bittrex has recently been actively engaged in suppressing pumping. Be that as it may, the majority of altcoins have experienced pumping, which means that the opportunities for short earnings are more than enough.
Who creates the pump?
If there is a potential opportunity to earn on pumping, but it is best to initiate and lead the process yourself. Practice shows that if you pump up a coin of only 50 percent, then the net profit will be about 10 percent. But this is the minimum, because with a good deal the organizers manage to double the cost of the coin. And this is already 50 percent of the profits from the air in a few minutes.
Who can organize pump:
- a single person with serious amount of cryptocurrency assets;
- a group of small investors who combined their assets for pumping.
In the first case, a whale or a shark of a crypto market should have at its disposal assets ranging in value from tens to hundreds of thousands of USD. The minimum threshold is 15000 USD.
The less expensive, but more complicated is the second option:
Several traders join forces to pump together the selected cryptocurrency. They create an hourly/per-minute plan and act in concert.
The initiator can create a pumping group in the social media and attract everyone to the pumping. He and only he signals how and when the group members should act.
In any case, organizing pumping isn't an expensive business and a small investor can't afford it.
What are the chances of an ordinary investor?
As it was stated above, it is problematic to independently organize pumping as an ordinary investor, if not impossible. But you may think about several working scenarios:
- Become a member of the pumping group
We will not list from the title, but note that most of them settled in Telegram and consist of thousands and even tens of thousands of participants.
Theoretically, everything is simple - register, follow the announcements about the planned pumping, participate in the buy of the cryptocurrency and merge it at the peak of value. But almost everything is not so simple. The investor should understand that the organizer of the pumping is primarily interested in his own profit and therefore the members of the group can obtain information about the buy or discharge of coins at the very last moment. And the investor isn't at all interested in being in a huge queue wanting to buy or sell a coin on time. It turns out that the organizers often use the group as an extras that rock the cryptocurrency.
- Pumping yourself
To initiate large-scale pumping, you need to do a serious preliminary work:
- advertise little-known cryptocurrency;
- create and spread effective information reasons;
- initiate hype in the trading environment by means of exchange chats.
After that, the pumper creates optimal conditions for entry into the first wave of pumping, when its competitors are just beginning to buy up the coin. But to create conditions and track their result are different matter. In order not to monitor the day and night of the state of cryptolocurrency, you can use the following tools:
- Subscription on pumping channels of social networks. This is convenient, because even if the trader doesn't plan to participate in the pumping, he, at least, can track the news and, if he wants, join the process.
- Use of a special service for monitoring. Such as CoinData.
- Using a bot that tracks pumping. This, for example, CoinToolsBot.
- Creating pending orders. This is the safest way. The trader simply puts a short order on the exchange with an obviously inflated purchase price, which will work when pumping, or will simply be canceled.
Usually, the net profit of an ordinary investor is about 54 percent.
Few recommendations how to avoid losses on pumps
For a small investor, pumping is a risky zone. Therefore, the trader won't be superfluous with our simple advice:
A pumping channel with numerous participants isn't the most effective way to earn money. If you decide to participate in a group of pumpers, then pay attention to the number of participants. Ask the group's reputation in third-party forums. Make sure that the pumping notification comes in a timely manner.
Usually, there are two waves of pumping. The good sign is at the maximum of the first wave, after which there will be a slight decline, and then an even higher rise in the price of the coin. So - don't expect to get super-profit on the second wave. This is too much risk, which, perhaps, the organizer of pumping can go.
Don't involve all available assets in the pumping. Thirty percent is the maximum that you can risk when organizing and, especially, participation in pumping.
Pumping isn't an activity for hamsters. This rather uninhibited way to earn on crypto market on the forces only experienced trader who knows how to act cautiously.