Telegram — The dark web for scams in the stock market
— by Aswin Samay
“In investing, what is comfortable is rarely profitable.” — By Robert Arnott.
When the COVID-19 pandemic hit, millions belonging to tier-2 and tier-3 of the Indian population became jobless, the economy fell by more than 40%, and the entire import-export supply chain worsened. Something magical was happening. College students who were sent home were finding ways to make passive money. New Demat accounts opening with NSE were rising dramatically with high acceleration. YouTube channels related to finance were going viral, and these content creators gained a massive amount of subscribers. Our cricket heroes, Sachin, and MS Dhoni were found saying, “Mutual Funds Sahi Hai.” Brokers were experiencing frequent server crashes as they couldn’t handle colossal account openings. And social media was flooded with ads and paid promotion of finance-related content creators and brokers. Then came the Zee TV series “Scam 1992” in the middle of October 2020, featuring the true story of Harshad Mehta, inspiring the youth with its superb dialogues, and inviting everyone to explore the stock market.
So, what’s the problem? If people are opening Demat accounts, it’s great, right? Yes, it is good for the economy, but their motive for entering this warzone matters. Most people have the mindset of making easy money, whereas the hard truth is that the stock market can be brutal. While retail participation was rising, the variety of ways rookies got scammed and lost their life savings was also taking the lead.
I was one of those rookies who opened a Demat account at the end of 2020, hoping to make lakhs of profit with an investment of just Rs 25K. Around February, I began trading in options, the riskiest path in the stock market, almost similar to gambling. Over the next nine months, I encountered many instances where my friends and I indirectly got scammed. Sometimes I didn’t even realize that it was a scam. Ultimately we ended up losing money in many ways, and here I will be discussing every one of them for your awareness and your wallet’s safety :)
Social media:
In social media, most of the share market scams happen in telegram, so the ultimate aim of the scammers is to redirect us to their telegram channels, and there are several paths (Instagram/Facebook ads, moneycontrol, 3rd party apps, etc.) through which you might fall into this trap; we will discuss them below.
One of the first steps you may take to explore the share market is following all the relevant Instagram pages; this is a good practice as there is some excellent content out there. Yet, the problem comes when they partner up with other pages and indulge in paid promotions. They put all kinds of ads that motivate you to follow those pages. For example- “this page is owned by a financial expert who has helped many get financial freedom”. The entire scam base is directed towards beginners or newcomers who are vulnerable.
As soon as you follow them, you will start getting weird and unprofessional messages.
You may somehow get redirected to a Telegram channel, where these financial experts will be offering free buy and sell recommendations.
Generally, these Telegram channels have two options — free and paid, where you have to pay monthly or yearly fees to access those paid recommendations.
Now here there are four ways in which you can lose your funds:
- Trades made based on these free recommendations (recos) may go wrong, and you will make losses. If you complain about their recommendations, you will get some frustrating replies, but they will try to get you to join their paid subscription.
2. They will show very attractive screenshots of their existing clients making huge profits and high accuracy of their recos to somehow trick you into joining their paid services.
3. They may sell you a course with desirable titles Eg-” the complete technical analysis master program,” with screenshots of all existing user reviews that are too good to be valid.
4. You may buy their paid membership and stop researching on your own, which is a massive loss above all.
Now that we have seen how these telegram scams work, I would like to inform you that not all telegram channels related to the stock market are scams; some open telegram channels are worth following where we get daily news updates or people form communities discuss their views on different analyses.
Also, scams don’t happen only on telegrams; there are many other ways too — for example,3rd party websites, money control forum pages, discord, etc.
Suppose a doctor wants to treat a patient. In that case, he requires at least six years of practice and study; if a pilot wants to operate a passenger flight, he needs at least four years of training and guidance. Still, in the stock market, people can instantly open Demat accounts and start trading without any direction or practice; that’s why most people make huge losses.
Eight months of trading is minimal experience, but I learned a lot of things in options trading, and I would like to conclude them within 15 points:
● For the first 4 months, trade only in equity without taking any leverage.
● Trading in the stock market is a marathon.
● Protecting your capital is vital. (Learn to protect first)
● Making 0 on the day is better than losing 50k
● Losses happen; they are part of this business.
● You are your biggest enemy. Learn to be mentally disciplined.
● Don’t follow the majority. Follow the correct path.
● Traders without a stop loss end up not being traders for long.
● There is always another trade.
● Big profit is gained by waiting for the right opportunity.
● Waiting for the right trade is the most potent strategy.
● It is better to cut a loss than to wait to be proven right.
● Position sizing can make or break you.
● Worry about the downside before you even think about the upside.
● Learn from someone who has accomplished what you wish to.
“Every once in a while, the market does something so stupid it takes your breath away.” — By Jim Cramer
