Free riding

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.

Free Riding The practice of buying shares or other securities without actually having the funds to cover the trade. This typically occurs when one closes out a position prior to funds being settled.

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If a purchaser buys the stock and then sells the stock before paying for the original purchase (in essence borrowing money from the broker), the trader is free riding.

free riding The withholding of part of a new securities issue by a syndicate member, with... free right of exchange The ability to transfer stocks from one party to another without incurring a fee.

See also: Issue, Stock, Market, Exchange, Securities