Don't rely on promises of quick profits, "insider" information, reliable sources announcing future events that will make the stock skyrocket and pressure to buy the securities the price of which is predicted to rise shortly.
Be careful of information posted on message boards under aliases. Some promoters and company insiders will hide their identity in order to lure unsuspecting investors into buying worthless stock of a failing company under false pretenses. Carefully examine all postings by these persons, as well as their "conversations" with others, for obvious pro-company agenda and cyber bullying of those who mention negative realities.
Whenever you see promises such as "guarantee," "high returns,", "safe investment", "undervalued stock", consider them to be red flags. There is no such thing as a "risk free" penny stock investment and "undervalued" penny stock may simply be worthless. Be especially cautious with offshore scams and investment opportunities in other countries, as your legal recourse there will be almost nonexistent.
Be careful if the Company routinely uses Form S-8 to register shares for insiders, employees or consultants. Form S-8 allows companies and promoters to flood the marketplace instantly, with registered shares that have been issued to anonymous individuals and companies.
Be especially cautious if the company has engaged in one or more reverse mergers, changed its name and stock symbol.
TELLTALE SIGNS OF STOCK FRAUD
PENNY STOCKS EXPOSED