Front Running - Explained

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In this video, you will learn about the concept of front running.

#frontrunning #unduegains #wallstreetmojo #insidertrading #financialmarkets

Chapters:
00:00 – Introduction
00:22 – What is front running?
01:39 – Examples
02:31 – Advantages
03:16 – Disadvantages
03:56 – Front running vs insider trading
04:39 – Conclusion

What is front running?
Front running is when a trader or a broker gets big order from a client but places the same trade in their account first and then places the client’s trade.

This allows them to profit instantly on the stock price’s movement just after the big order hits the market.

(Explained in detail in the video)

Examples
We have taken an example in the video that clearly explains the concept of front running. You’ll need to check out the video.

Advantages
Traders or brokers get to earn from the trade they place on their own and also from commissions.

It is often difficult for regulators to track this activity; sometimes, traders and brokers can get away with it without repercussions.

Disadvantages
Front running is illegal, so if regulators know about it, they will penalize the traders or brokers.

If the client places the order but cancels it, then brokers can be stuck with the position they entered and may even incur a loss.

Front running may lead to the client getting in on the position at a bad price.

(Explained in the video in detail)

Front running vs insider trading
In insider trading, the person knows some price-sensitive information that has not yet been made known to the public. It could be information that only someone closely related to the company knows.

In the front running, the person acts only on the information that a big player is interested in buying or selling the stock.

This was all about front running. Subscribe to the channel, give the video a like, and share it with others.

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