Free riding (also known as Freeriding or Free-riding) is a term used in the stock-trading world to describe the practice of buying shares or other securities without actually having the capital to cover the trade. This is possible when recently bought or sold shares are unsettled, and therefore have not been paid for.
Since stock transactions usually settle after three business days, a crafty trader can buy a stock and sell it the following day (or the same day), without ever having sufficient funds in the account.
Read more about Free Riding: Trade Day + 3 Days, Free Riding Violation, S.E.C. Enforcement Actions, Good Faith and Free Riding, Liquidation and Free Riding, Economics
Famous quotes containing the words free and/or riding:
“The free man is a warrior.—How is freedom measured among individuals, among peoples? According to the resistance that must be overcome, according to the trouble it takes to stay on top. The highest type of free man must be sought where the highest resistance is constantly overcome: five steps away from tyranny, close to the threshold of the danger of servitude.”
—Friedrich Nietzsche (1844–1900)
“But, after the war was over, just think what came to pass—
A letter, sir; and the two were safe back in the old Bluegrass.
The lad had got across the border, riding Kentucky Belle;
And Kentuck she was thriving, and fat, and hearty, and well;
He cared for her, and kept her, nor touched her with whip or spur:
Ah! we’ve had many horses, but never a horse like her!”
—Constance Fenimore Woolson (1840–1894)