“Curbside” refers to trading securities without using a stock exchange, often done after hours or on weekends. It has a long history, but now can be done electronically. It requires understanding the securities and assessing risk for potential gains.
“Curbside” is a term sometimes used in investment and financial circles. The term has to do with the process of trading certain types of securities without actually going through a stock exchange. This approach to trading securities is sometimes useful when investors want to continue trading even after the exchange has closed for the day, or to arrange trades on weekends when the exchange is closed.
While there is some difference of opinion as to the origin of the term, being on the curb is generally associated with investors who choose to do business on the street, directly outside of an exchange that has closed for the day. Here, the picture is of investors leaving the exchange when it closes, but still wanting to do a certain amount of trade before the end of the day. While literally standing on the curb in front of the exchange’s front door, buyers and sellers strike deals that are then finalized as soon as the market opens the next business day.
Sidewalk trading has a long history in the investment world. Sometimes referred to as a gentleman’s trade, the practice made it possible for buyers to obtain securities before the start of the next business day, effectively strengthening their position in the market at the start of the next business day. At the same time, sellers who wanted to dump stocks they believed would suffer a significant downturn the next day could sometimes sell those stocks on the sidewalk and avoid taking the loss when the markets opened and active trading began once more.
With the advent of investing over the Internet, the nature of sidewalk trading has taken on a new dimension. At one time this practice was somewhat limited, as trades took place face to face between investors or their agents. Today, it is possible for investors to enter into deals electronically after the main trading hours of the exchange, completing all the necessary components of the transaction before the start of the next trading day.
As with any type of investment approach, choosing to make a curbside stock purchase requires understanding the current state of the securities in question and making an accurate projection of where the value of those shares will move after the purchase is complete. transaction. This includes assessing the degree of risk associated with the asset, relative to the potential return. By making prudent use of this approach, it is sometimes possible to insure assets just before they experience a significant improvement in value, reaping considerable gains from curbside trading.
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