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Strategies & Market Trends : Analysis Class for Beginners

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To: Arthur Tang who wrote (678)12/20/1997 6:16:00 AM
From: Arthur Tang  Read Replies (1) of 1471
 
Insider trading and market making?

Some times a single event of significance, can tempt even the best of us to use the information to make a killing. SEC ususally watch it closely. But your market maker may be the informant; because they got scalped. Insider information is abundant; when some merger or acquistion is coming. Or that some large order will soon be received by the company.

What market makers do in making a market; is selling the stock to people who appreciates the stock. That means your hairdresser, your vendors and customers. Is there danger of insider information being used inproperly for profit. Market makers can smell it a mile away; because they always ask why you want to buy or sell the stock. They can not do that on internet, though. But then internet brokers limit your transaction size and you are limited in the size of the profit. If the profits are small, it isn't even worth it to be bothered by it.
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