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How to Spot an NFT Scam

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Written by Timothy Sykes
Updated 3/24/2022 4 min read
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If you’re like me, you keep seeing a lot of stories about NFTs and the potential in this explosive market.

It seems like so many average Americans are getting rich off NFT mania…

NY Times NFT headline
Source: The New York Times

But where there’s hype and money … you better believe scammers are lurking around the corner.

Don’t worry. After more than two decades in the markets, I know a scam when I see one.

I’m not saying all NFTs are junk. There are legitimate opportunities. Check out one of my students …

Adam Jarrett joined my Trading Challenge in 2020. After day trading his way to +$100,000 in profits, he switched to trading NFTs.

Here’s a trade he posted…

NFT trade recorded on profitly
Source: Profit.ly

There’s money in NFTs. But where do you learn how to navigate this world? Who’s sharing great opportunities and who’s just looking to scam people?

Let’s break it down…

Discord Scams

Trading mentor Tim Sykes realizes he made a trading mistake
© Millionaire Media, LLC

Most NFT discussions happen over the chat app Discord. This app is home to plenty of trading chat rooms where people share information, ‘hot’ stocks, and strategies.

It reminds me a lot of chat pumps from the meme stonk days — back when GameStop Corp. (NYSE: GME) launched to the moon.

Fake trading gurus would claim to know the next Reddit spiker and a slew of gullible newbies would believe them.

I’ve seen it happen too many times to count. Unfortunately, that’s how I find a lot of my students. They hear about the Trading Challenge after an online scammer takes all their cash. It’s too late for me to help.

If that hasn’t happened to you, count your blessings.

That’s why I created a chat room full of dedicated students that learn to trade the right way. And in order to keep the jokers out, there’s an application process.

That’s not to say that you can’t find legit chat rooms on Discord. But you must know how to stay safe. So say you’re looking to join a Discord channel for NFTs. Here are some smart rules to follow…

  • Be wary of suspicious DMs. If you don’t know the person messaging you, alarm bells sound.
  • Never give away private details. All crypto wallets require some form of password/secret code. These are unique to your account. Treat them like a Social Security number.
  • Investigate the developers of potential investments. This is a lot like stock trading. It’s hard to profit if the project creators have a poor track record or are scammers themselves. Check out this story.

There’s the potential to make money in this niche. But you have to stay alert and aware.

Trading NFTs

tim sykes in yosemite
© Millionaire Media, LLC

I love to trade penny stocks — it’s been my go-to niche for well over 20 years.

But they’re not always hot. Right now there are a few opportunities, but I’m itching to find more volatility

The NFT market could be exactly what I’m looking for. And students like Adam Jarrett and Matthew Monaco have shown me this niche is legit.

Speaking of which … on March 30th at 8 p.m. Eastern I’m going live — with Adam — to help all my students get a jumpstart on NFT trading.

Reserve your spot right now!

You don’t want to miss this. The first one to the opportunity is the first to profit. This is your chance…

Do you see the potential for this niche to explode? What further questions do you have?  I can help you, leave a comment!

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”