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if one has to sell a huge pool of shares, is it moral to buy a small amount of stock only to dump much larger amount at that price level? Is stop loss hunting (i.e brokers can see stop loss orders and they can move price just enough to shake out the trader from profitable position) morally defendable?

asked Mar 26 '12 at 09:49

Trewesta%20Anamoly's gravatar image

Trewesta Anamoly
502

edited Mar 26 '12 at 15:36

Greg%20Perkins's gravatar image

Greg Perkins ♦♦
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Are you asking if it's moral to make money selling stocks by taking a calculated risk within the "rules of the game"? As long as the transaction is not based on some fraud/lie/misrepresentation I'd think it's fine.

(Mar 26 '12 at 14:44) Jason Gibson ♦ Jason%20Gibson's gravatar image

I say the same goes for so-called "insider trading" see for example] here

(Mar 26 '12 at 14:48) Jason Gibson ♦ Jason%20Gibson's gravatar image

pumping up the price a stock before dumping them to suckers, sure is 'within the rules of the game'. I understand 'insider trading' is not immoral, 'making money' by taking calculated risks is perfectly okay.

I am not able 'reason out' properly to defend or attack the 'pumping and dumping' activity.

some say 'painting the tape' is just like advertising, after all the owner of the stock can do whatever he wants...

Could the person following such a strategy can ever take pride in their profits !?

(Mar 27 '12 at 08:58) Trewesta Anamoly Trewesta%20Anamoly's gravatar image

To the extent that they rely on buyers believing their fraudulent claims about a stock I do see an issue. However, it would seem the buyer has some responsibility as well to fully research a stock before investing. I find myself needing more research/thinking on this one... (I must say I've enjoyed reading up on / learning some of the colorful language used in stock trading.)

(Mar 29 '12 at 14:05) Jason Gibson ♦ Jason%20Gibson's gravatar image

In the case of brokers who can see stop loss orders I would think they are contractually bound to not share such information or use it to their client's detriment.

Your description of stop loss hunting where brokers use confidential client information, does not seem ethical.

(Mar 29 '12 at 18:57) anthony anthony's gravatar image
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Asked: Mar 26 '12 at 09:49

Seen: 1,253 times

Last updated: Mar 29 '12 at 18:57