Beginner4 min readThe Stock Market for Beginners · 11/11
How to Protect Yourself from Stock-Tip Groups and "Guaranteed Profits"
When you start investing, you may come across messages and groups promising you a stock that is "about to fly" and a guaranteed profit. These messages look almost the same every time, and knowing the signs can save you a lot of money.
What you will learn
Spot five signs of a suspicious tip message.
Understand one possible scenario in which the tip-giver profits from followers buying in.
Know what to check and where to report.
The lesson as a short video · 24 seconds · Watch on YouTubeIn this lesson
This message is invented, but you will see many like it. Any one of these signs is enough to make you stop and ask; together they make it obvious.
"Daily Profits" groupAn invented message
1A stock about to fly this week
2Guaranteed profit 50%
3Get in before 12:00 or miss it
4The secret tip is only in the VIP group, fee 500 EGP
5Screenshot: a member made +80,000 EGP
Each number is a warning sign. Details below.
"About to fly"Nobody knows where a price will go. Whoever claims to know is selling you a feeling, not information.
Guaranteed profitNo stock is guaranteed. Anyone promising a fixed return is promising something that cannot always happen.
Urgency"Get in now" is designed so you have no time to think or ask.
Selling a secret tip inside a VIP group, with profit promises or urgencyA paid subscription is not a problem in itself. The danger is when you pay for guaranteed tips, promised returns, or a service from an unlicensed entity.
Screenshots of gainsThey can be faked or shown selectively: the wins appear and the losses disappear.
One scenario that can happen
This is one scenario that can happen, not a description of every group: the sender bought the stock before sending the message. When followers pile in together the price rises, and he sells to them. When the buying stops, the price drops back.
1They buy quietlyBefore telling anyone2.00
2They send the messageFollowers buy, the price rises2.60
3They sell to followersAt a profit2.60
4The buying stopsThe price falls back; latecomers take the loss2.05
A scenario with invented numbers. Whoever started profited; whoever came late took the loss.
ExampleIf you bought at 2.60 with EGP 10,000 and the price fell back to 2.05, you lost about 21%, close to EGP 2,100, in a few days, on a stock you knew nothing about.
Watch outIf nobody talked about a stock and suddenly every group does, ask yourself: who is selling to me right now?
What to check, and where to report
Ask: is this entity licensed?The Financial Regulatory Authority (FRA) advises checking any financial entity's license on its website before dealing with it.
Look for the reasonOpen the company's disclosures and news. A sharp rise with no news at all is a question in itself.
Never transfer money to individualsInvestment money belongs in your account at your broker, not in a mobile wallet in a person's name.
Report itThe FRA keeps a warning list of unlicensed entities and pages, and takes reports on the 19669 hotline or at [email protected].
Check for yourself before you believe
Before acting on any message, open the company's disclosures and see whether there is real official news. FoudaLens itself shows descriptive analysis and never tells anyone to buy or sell.