front running question

let's say, hedge fund managers and many professionals use a secret method/technique to enter on instruments which would cause some price movement which the average retail trader could profit from; if the average trader found out this method, or was told it, and he bought/sold right before the big money did-would this be illegal?

No

how is it not illegal? surely this is almost like insider trading?

That's not only not illegal - it's business as usual and common practice in the fx industry, and the source of a good part of fx trading revenues. For many professionals it's the main way of making money, i.e. by inside info on where (i.e. at what price) and when what orders will go through.

No, in Forex it is quite common. No regulation means you can play as dirty as you like. In other regulated markets it is illegal such as in stocks and futures, although it's hard to prove and or enforce. If you have knowledge on what trades hedge funds intend to make and when, you can front run them all you like.

Not almost but a lot better, because it's not trading on some undisclosed soft corporate info but very precise info such as Deutsche will sell three yards Euro for a client at the 8am (London time) fix. And the client doesn't know the specifics of the fx market, so the dealers will use all means possible to push up the price to a nice level, take positions for themselves and their friends, and then run the client order. Sweet isn't it?

im talking stocks , not forex

Yeah, that's probably 'technically' illegal. Larry Harris in his book talks about cases of legal front running, however. I recall one example where a clever trader learns to read the body language of certain broker who takes large outside orders. He somehow infers whether or not it's a buy or sell order and then legally front runs the guy.

For me if it's a method ,it's legal .In fact ,if you aren't spying to have the info it isn't illegal ,otherwise tapereading would be illegal.
I think the real question is do you think that etical ? (if not it's probaly illegal or will be )

If you obtained a "secret" method of entry from a broker/pro, then yes it would hold up in court as illegal.

If you obtained a "secret" method of entry from anyone directly/indirectly associated with the broker/pro, then yes it would hold up in court as illegal.

If a broker/pro found out you had their "secret" and the entity took you to court over the matter, the first question the court will ask is: "How did you come about such information?" You'd better have a damn good answer for that question as that will determine your success in that legal matter. The key word here is "secret". Secret anything isn't just handed over to anyone or anybody. So when you use the word "secret", the word "stolen" would also be implied. This all, of course, assumes the broker/pro found out you obtained the secret. If you use the secret for personal use and no one knew you had it, then I see no reason for you not to use it. Sell it or publish any inner workings of it, would be seen as illegal.

The answer you are going to get from most retail traders is, no ... it is not illegal. This conclusion is usually on the basis of, most market strategies are common knowledge. This is not the case. There are a lot of strategies that are not common market knowledge or common market strategy. In fact, if the strategy is a "secret" more than likely the broker/pro would have Trademark the idea. Oh yes, you can trade mark your ideas, strategy, indicators, etc. A lot of Big Brokers/Banks do trademark their secret information. I know, personally, of a pro trader who trademark an indicator he developed (i.e. programming of said indicator). Intellectual property is big business ... lots of free money to be made if you're found guilty.

I read that they use FATL, SATL indicators. I can't find the article, but still looking.

couldn't someone just wait until the intial block order happens, then trade it? then you could argue that the price action told you to buy, also what if the technique isn't trademarked?

If you're so concerned, maybe you shouldn't get involved at all. Fortune favors the brave, or so they say.

so it's always illegal to jump in front of hidden orders? even if you're a third party and you aren't a broker front running his clients?