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:
“Who are we? And for what are we going to fight? Are we the titled slaves of George the Third? The military conscripts of Napoleon the Great? Or the frozen peasants of the Russian Czar? No—we are the free born sons of America; the citizens of the only republic now existing in the world; and the only people on earth who possess rights, liberties, and property which they dare call their own.”
—Andrew Jackson (1767–1845)
“Oh he
Comes designed to my love to steal not her tide raking
Wound, nor her riding high, nor her eyes, nor kindled hair,
But her faith....”
—Dylan Thomas (1914–1953)