Chapter 5

Regulation and the Modern Trader

In This Chapter

arrow Identifying the regulators

arrow Considering basic brokerage requirements

arrow Avoiding insider trading tips

arrow Protecting the markets in crisis situations

arrow Following procedure when you take on partners

The financial markets are wild and woolly playgrounds for capitalism at its best. Every moment of the trading day, the actions of buyers and sellers determine what the price of a stock, commodity, or currency should be at that moment, given the supply, the demand, and the information out there. It's beautiful.

One reason the markets work well most of the time is that they are regulated. That may seem like an oxymoron: Isn't capitalism all about free trade, unfettered by any rules from nannying bureaucrats? Ah, but for capitalism to work, people on both sides of a trade need to know that the terms will be enforced. They need to know that the money in their accounts is there and is safe from theft. And they need to know that no one has an ...

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