How To Protect Yourself From Financial Scam In The Stock Market?

Over the last few decades, financial scams have become common in the stock market. Many people have been the victim of such frauds.

In this article, we will explore some measures a trader can take to protect oneself from such financial scams in the stock market.

Do Not Fall For Tips Or Calls

Several people have fallen for free or paid call and tips groups on messaging apps like Telegram. This has stayed on top of the list since the internet became popular. 

After Covid, many people entered the market. This generally happens when a person on Telegram gives detailed information about a stock or a position and tells the people in the group to buy them or to make a type of position. 

It is crucial to note that people sharing the details of the position have no accountability for your loss. In many cases, people have fallen into pump-and-dump schemes just because of these telegram groups. Many people are known to me. 

There are many ways a scam can happen to you. Someone will guarantee you a certain percentage of monthly return for taking their call. A person on Instagram or any other social media platform brags about the profit they make today. My advice to you would be to not listen to them. Stick to your own due diligence and be in the learning mode. When you make money from someone's call, you're not learning to make money through stock trading. As a trader, depending on someone else is unhealthy and can lead to significant losses. 

Account Handling OR Portfolio Management:

This is also one of the classic scam methods in the Indian stock market. After literacy about the stock market increased, this became even more popular. Here, a person gives you hope that he will attain this much percentage of return by managing your capital. He will only have a small commission on your profits. He'll ask you to assign your password and account details to him. 

Once you share your confidential details, he has complete control over your capital and portfolio. You might think there is no harm in this, but I have seen many such cases in the last two years. 

My Instagram and WhatsApp are full of people making this mistake and selling their capital vanishing away in front of their eyes. For some people, this might be a good experience. However, when you do it, you have a massive downside. You do not understand markets and have no experience. Moreover, you're assigning somebody your money earned through your hard work. 

It's my personal recommendation to come via the professional route of mutual funds, where a professional fund manager manages your capital. Once you are experienced enough, build your own portfolio.

Over Expensive Trading And Investing Courses And Classes

Recently, I have seen advertisements for many overpriced courses and classes on social media. Such courses promise to teach you "secrets" or "strategies" that guarantee success in trading or investing. 

However, these courses do not always justify their high price tag. You can find similar information for free or at a much lower cost through credible sources like books, online tutorials, or educational platforms. 

Another aim behind starting my YouTube channel was to provide information to people. 

Paying a high amount for a trading or investing course does not guarantee success in the financial markets. My people spend up to five lakhs just for seminars and irrelevant courses and waste their hard-earned money.

Trading and investing involve inherent risks, and even the most expensive courses cannot eliminate these risks or guarantee profits.

Success in the markets requires knowledge, skill, experience, and sometimes luck, which cannot be bought with money alone. Overpriced courses and classes may use high-pressure sales tactics to persuade potential customers. They may create a sense of urgency or fear of missing out (FOMO) to push people into buying their products. 

This point can be easily misunderstood. I am all up for learning. To date, I have bought courses to focus more on learning different skills. However, I have an Indian brain. Thus, I look for "value for money." 

Over-expensive courses make exaggerated claims about the potential returns or benefits of their course. Trading and investing are not get-rich-quick schemes, and anyone promising unrealistic returns is likely exaggerating or misleading you.

While the above three are the main scams that are happening around the Indian stock market, there are still many that we haven't covered. However, the one simple thing a trader can do to stay away from these scams is focus on learning. Without learning, you cannot have any earnings in the stock market.

Markets can become simple to understand. The hard part is where you need to execute things and that. It takes time and effort. Please don't fall for any scam selling you quick money or a hidden secret to make money. Just follow the process and trust it. If you have any doubts, you can hit me up.