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Front-running is nothing new, this is simply a game of follow-the-leader where copying a group's investment strategy is done until larger players learn to front
by kregasaurusrex 5y ago
Front-running is nothing new, this is simply a game of follow-the-leader where copying a group's investment strategy is done until larger players learn to frontrun or adversarially trade against the aforementioned frontrunners entering in. For example, a scanner may pick up an SEC filing published at 4:01 PM saying that the CEO, CFO, and CIO all purchased shares in their company, and traders would buy shares aftermarket before most institutions/derivative traders would see the report tomorrow morning. I'd guess that today's active investing crowd is a lot more interested in seeing outsize short-term returns based on information asymmetry than members of congress who more likely to hold in order to get long term capital gains tax applied.
- deleted 5y ago[deleted]
- OJFord 5y agoIf you want to label it, it's more 'pump and dump' than front-running isn't it? I understand the latter to be broker (or whoever) trading with knowledge of, ahead of in time, in front of, other orders? I.e. exactly the opposite of 'follow-the-leader'
- seabird 5y agoIt's certainly not frontrunning. Any time securities trading comes up on this site, there's at least one person trying to claim that X thing is frontrunning when it isn't even close to being able to be called that.
- deleted 5y ago[deleted]
- kregasaurusrex 5y agoIn practice, they want to be the first people to experience the price movement on newly public information, so you're right it wouldn't be front-running, my (incorrect) interpretation was that they would 'get in front of the trade made by C*O of fictional company before anyone else notices'. It's also not considered tailgating since they have no financial relationship with any of the executives, and acting on these fully disclosed positions would be completely legal.