The CFTC cautioned investors to conduct research before acting on tips from social media.
In a Customary Advisory, the CFTC advised retail investors "to research and understand the commodity futures markets, physical markets, and securities markets before trading based on information on social media." The CFTC advised investors to:
- only trade with "risk capital" (i.e., money the consumers can afford to lose);
- learn the differences between markets, including the securities, futures, options and physical markets;
- obtain and review prospectuses and disclosure documents;
- develop a trading plan specific to an investor's own risk tolerance;
- consider the information's source and the risks associated with following the advice of unregulated individuals;
- understand that investing in physical precious metals is not risk-free; and
- utilize free or low-cost educational resources available online.
Primary Sources
- CFTC Press Release: New CFTC Customer Advisory Cautions the Public to Beware of Trading Based on Internet Hype
- CFTC Customer Advisory: Understand Risks and Markets before Reacting to Internet Hype
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