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hedgefunded

Some Share Dealing Questions

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Hi all.

This isn't a joke but can someone answer the following for me please. I feel I ought to know the answers and what better place to ask?

1 - I buy and sell my shares using iWeb. When I buy or sell, who am I selling to? Is it iWeb, or is there always someone who wants the other side of the trade?

2 - What exactly defines 'insider trading'. Is it just trading on knowledge that's not in the public domain, because there must be thousands of people who know all sorts of useful info. Who can therefore legally act knowing that company A is in talks with company B etc...

3 - As I understand it, the stock market has to move in a random way. If people knew what was going to happen to a share, then it would never get traded. Nobody will buy XYZ at $10.00 if they know it's going to be worth $5.00 tomorrow. On those grounds, and given that trading with inside knowlege is illegal, how do people ever get good at knowing how the market will move? Are they anything other than lucky?

Those are serious questions, I'm not trying to act dumb. I would especially like to know the answer to Q1

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Hi all.

This isn't a joke but can someone answer the following for me please. I feel I ought to know the answers and what better place to ask?

1 - I buy and sell my shares using iWeb. When I buy or sell, who am I selling to? Is it iWeb, or is there always someone who wants the other side of the trade?

2 - What exactly defines 'insider trading'. Is it just trading on knowledge that's not in the public domain, because there must be thousands of people who know all sorts of useful info. Who can therefore legally act knowing that company A is in talks with company B etc...

3 - As I understand it, the stock market has to move in a random way. If people knew what was going to happen to a share, then it would never get traded. Nobody will buy XYZ at $10.00 if they know it's going to be worth $5.00 tomorrow. On those grounds, and given that trading with inside knowlege is illegal, how do people ever get good at knowing how the market will move? Are they anything other than lucky?

Those are serious questions, I'm not trying to act dumb. I would especially like to know the answer to Q1

1)Basically there are nearly always Marketmakers as a backstop (these have more and more been replaced byauto systems such as SEAQ, AIM is still mainly market maker though), except in high periods of volatility which is why there are auto cut off mechanisms in a crash scenario

its rather complex but there is a reasonable summary here, seeing "level 2" movement gives an understanding of how prices move

2) Insider trading is notoriously hard to prove unless you are a muppet which is why so few convictions happen but technically it is part of any healthy market and always will be. Its clear it goes on because before any takeover or merger or profit warning you will always see volume pick up before the event

3) Some people believe Random Walk theory, others dont, what it is true to say is the moment a market is solved it has to change, it is a natural event, which is why black boxes are laughable.Making money in a market is not neccesarily down to being right (it helps but is not the most important requirement, success requires strategy,mapping and sound money control). I know 2 guys who are consistently profitable daytrading (god help them) with less than a 40% success ratio

Edited by Tamara De Lempicka

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Hi all.

This isn't a joke but can someone answer the following for me please. I feel I ought to know the answers and what better place to ask?

1 - I buy and sell my shares using iWeb. When I buy or sell, who am I selling to? Is it iWeb, or is there always someone who wants the other side of the trade?

2 - What exactly defines 'insider trading'. Is it just trading on knowledge that's not in the public domain, because there must be thousands of people who know all sorts of useful info. Who can therefore legally act knowing that company A is in talks with company B etc...

3 - As I understand it, the stock market has to move in a random way. If people knew what was going to happen to a share, then it would never get traded. Nobody will buy XYZ at $10.00 if they know it's going to be worth $5.00 tomorrow. On those grounds, and given that trading with inside knowlege is illegal, how do people ever get good at knowing how the market will move? Are they anything other than lucky?

Those are serious questions, I'm not trying to act dumb. I would especially like to know the answer to Q1

These are good questions.

I dont trade individual shares myself for these reasons.

Many of the people you are trading against have more information than you about the company.

So it will be harder for you to take their money.

Todays markets are choppy, imho share dealing/trading (especially for begginers) should only be done in bull markets.. Like between 1982 and 2000. And even then its hard to make money.

Edited by MonkeyNuts

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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