Stock Market Glossary

Front running

Using knowledge of upcoming client orders for proprietary or earlier trades.

In brief: Using knowledge of upcoming client orders for proprietary or earlier trades.

Meaning in practice

Front running creates an unfair advantage because the trader exploits known buy or sell orders before the client. In regulated markets, this conduct is generally prohibited and is relevant to compliance and market-abuse controls.

Context for investors and traders

For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.

How to use this in practice

Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.

What to keep in mind

Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.

What does Front running mean in simple terms?

Using knowledge of upcoming client orders for proprietary or earlier trades.

When is this term relevant to investors?

Assess the term together with price, costs, position size and a predefined loss limit. That turns a market observation into a traceable framework rather than an automatic trading rule.

What should I check before acting on Front running?

Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.

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