Sunday, 9 August 2015

What is Insider Trading ?

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Insider trading is when someone will buy or sell securities before the news about said security has reached the market.
(These numbers are examples only and not in anyway accurate)
Ex: Tech Mahindra  has quarterly earnings coming out before market open tomorrow. The CEO of TechM owns 10 million shares, since he is *inside* the company he knows that TechM will be reporting tomorrow. If the numbers are going to be bad, he would sell a portion of his shares today to avoid greater loses; if the numbers are going to be excellent, he would buy more shares today to gain from the increase in stock price tomorrow.
Not everyone needs to be inside the company to be apart of insider trading. Anyone who trades on a security with known non-public information is in violation of insider trading.

In India there are Many rules and regulations on insider Trading ...

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