there isn't much information around the internet distinguishing between legal and illegal front running. front running is illegal, but when? surely if we buy just before the SPY hits its 200 day moving average , where a lot of big money may enter, that is illegal? i have emailed the SEC on friday but havent got a reply, brokers i've asked won't talk as they don;t want to be held responsible. they say front running, jumping in before big orders is illegal , always, then surely placing a limit order in front of a visible block trade on level 2 is illegal? if i have a formula which large traders enter stocks in with, and front run that, is that illegal? is it illegal to wait until after the block trade has happened, then trade with it, even though it has a tendency to reverse market psychology/direction?
Getting in before the move is not front running. You only know you've done this after the fact. There is no guarantee that the participants and/or price will do what you expect them to do. Front running requires definite knowledge that a significant position will be taken at a certain time. The 200 day MA is just a line, the market does whatever it wants anyways, and it doesn't hinge on any particular technical signal.
You are certainly not the brightest bulb on the porch! Front running is very simple, getting in before the customer order, your frat brother Broker has 500K to buy of CRAP, prior to giving the order to his marketmaker to execute, he calls you on his cell phone from the pisser, you go out and buy 100 shares through your TD account, get it? As ZD pointed out, trading on publicly disseminated information is NOT illegal.
yes, ive done that , but all i've got is that front running is only illegal when it's when you're front running client orders in a brokerage house, or when you split profits with someone, say your HF manager agrees to split 50/50 when you buy just before he does. then some definitions say that it's illegal altogether to trade in front of block trades then some definitions say its only illegal to trade on non public information surely dark pools are non public information, and a secret method/entry formula is illegal to front run?
You're going to jail. Leave the country now, before they respond to your email. We are obligated here to report you for unlawful intent to use a lagging indicator to predict price movement. 420th post.
A stock like DGIT that drops 4 pts friday in a strong market on no apparent news -- then falls 9 today on an earnings warning. Now tell me, will any of those sellers on friday get prosecuted? Couldn't they all just say "I saw a weak stock and sold it/shorted it, just because it was weak"? Isn't that a valid excuse everyone uses?