Beating The Gun
An early 1950s film noir, in which a hard-bitten L.A. cop, played by an aging Humprey Bogart, investigates the death of an Olympic sprinter, who is killed when someone replaces a starter pistol with a real gun.
Okay...actually, its slang term used when a trader is able to properly time the market.
You own stock in a company that most people have never heard of, but which has a big contract to provide plastic cup holders for a large car manufacturer. News breaks that the auto maker had terrible sales for most recent quarter. You immediately know that the price of your shares will eventually tank, since bad sales for the automaker means bad sales for the cup holder company. You quickly sell your shares before most of the rest of the market figures out the connection between the two companies. You just beat the gun.
There's a distinction here between beating the gun and insider trading. Insider trading is making moves before the general market because you are illegally using non-public information. Beating the gun is just timing the market well by quickly reacting to events.
Related or Semi-related Video
Finance: What is Breakaway Gap?7 Views
Finance a la shmoop.. what is breakaway gap? well Letterman has one yeah that but [David Letterman's front teeth appear]
here we're talking about a trading pattern like on a stock chart like this
thing where the breakaway gap is a sudden change in trading pattern like
you're walking along just fine and easily recognized in comfy double bottom
pattern like this but then blam the company reports an awesome quarter in [Stock chart dramatically rises]
the stock zooms upward outside of the pattern it goes from here to here and
well now what like there's no pattern yet so what do we do well depending on
your lean prayer might help is the stock heading down now to normalize or up more
because now everyone thinks it's the next Google and wants to own it for the
long run so breakaways go up like this and
sometimes they go down like this but either way they break away from a [Arrow points to stock charts breakaway gap]
pattern and yeah, clearly this was not the next Google! oh well
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