how much do retail traders know about big boy's positions?

Discussion in 'Trading' started by TGpop, Aug 4, 2010.

  1. TGpop

    TGpop

    lol i expect this to be uninteresting, but to tie in with the other thread; do you think many people know where big money enters/exits?

    also if retail traders know a hedge fund is buying some stock, but the public doesn't...is it illegal/front running/unethical for them to profit from the price move?
     

  2. +No, not many know, but the option market can provide some decent clues...but no sure bets

    +Retail Traders = The Public

    +Not illegal to front-run if they have proof of HF accum/dist
     
  3. TGpop

    TGpop

    i don't mean 'knowing' by a reuters news article, but say an insider in the HF told retail traders; is that illegal?
     
  4. No you cannot know and you don't need to know. many of the traders in this board, leave 99% of HF performance in dust. Mostly because we are playing with much less money. If there is a service that sells real time info on big HFs for $10, a month, I won't pay for it because it is useless to me.
     
  5. TGpop

    TGpop

    i'm saying if you DID know, say that a friend told you 10 HFs were to enter AAPL at a price...imagine this happened....and you bought the stock their too....and you profited;would this be illegal?
     
  6. Depends how the friend knew. If your "friend" is being given the order to trade for these funds and they are front running the order then that's illegal. If he comes upon an IM or email by mistake then it's a grey-ish area but no it wouldn't be illegal in my mind.
     
  7. TGpop

    TGpop

    so it's only on the basis of people executing the trade ? so if i had a billionaire friend and he told me he and many other big money was longing google at 600 massively;if i went long at 600 would this be illegal?
     
  8. wenzi

    wenzi

    No, if your friend did not have any non public information, then it is fine.

    Look at the CFA standards and practices handbook and you will know all you need to know.
     
  9. The SEC monitors accounts.

    One of its foci is traders who trade very successfully on POA's of other accounts.

    You may be detected by the SEC if you consistently and successfully trade ahead of the herd. The herd includes big money.

    Once you are detected, then the SEC gets interested in your account(s).

    The SEC thinks it has a systemmic way of detecting "insider trading" by having a "profile" or "template" for detection.

    The SEC has a strong opinion of its abilities and skills.

    It is a royal pain in the ass to straighten out SEC mistakes.

    Now, with regard to HF's and MF's. None of them are market wise and trading ahead of them usually doesn't mean much except for very short term trading where the "market" gets out of balance vis a vis liquidity. See 06MAY10 most recently.
     
  10. That would be legal and your friend would be an idiot.
     
    #10     Aug 4, 2010