what is insider trading?

Answer 1

Insider trading is the trading of a corporation's stock or other securities (e.g. bonds or stock options) by corporate insiders such as officers, key employees, directors, or holders of more than ten percent of the firm's shares.[1] Insider trading may be perfectly legal, but the term is frequently used to refer to a practice, illegal in many jurisdictions, in which an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties at the corporation, or otherwise misappropriated.[2]

All insider trades must be reported in the United States. Many investors follow the summaries of insider trades, published by the United States Securities and Exchange Commission (SEC), in the hope that mimicking these trades will be profitable. Legal "insider trading" may not be based on material non-public information. Illegal insider trading in the US requires the participation (perhaps indirectly) of a corporate insider or other person who is violating his fiduciary duty or misappropriating private information, and trading on it or secretly relaying it.

Insider trading is believed to raise the cost of capital for securities issuers, thus decreasing overall economic growth.[3]

Answer 2

Insider trading is when you use knowledge from inside the company that someone outside the company would not know. For example, the company has just won a large contract or is about to release a new product, and the general public does not know yet.

Answer 3

when an individual acts on material non-public information with the intent to gain personal benefits by taking position on securities or by trading information is called insider trading

Answer 4

The illegal gathering or using by non-public dissiminated imformation to change how or what you trade in the public stock exchange. ie; if everyone doesn't know by public announcement, and you do in any way other than accidental observation that is provable, you're screwed.