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Term of the Day - October 4, 2004
http://www.investopedia.com
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Term Of The Day: Bucket Shop
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1. A fraudulent brokerage firm that uses aggressive telephone
sales tactics to sell securities that the brokerage owns and
wants to get rid of. The securities that they sell are
typically poor investment opportunities, almost always penny
stocks.
2. A brokerage that makes trades on a client's behalf and
promises a certain price, but waits until a price discrepancy
arises and then makes the trade, keeping the difference as
profit.
Investopedia Says:
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1. Bucket shops are sometimes called the boiler room. The U.S.
has laws restricting bucket shop practices by limiting the
ability of brokerage houses to create and trade certain types
of over-the-counter securities.
2. The second definition for a bucket shop comes from over 50
years ago, when bucket shops would do trades all day long,
throwing the ticket into a bucket, then they would decide at
the end of the day which account to award the winning and
losing trades.
Related Links:
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Article: Getting Ripped off by a Professional
http://www.investopedia.com/articles/01/022101.asp
Article: Protecting Yourself from the Swindlers
http://www.investopedia.com/articles/00/100900.asp
Tutorial: Brokers and Online Trading
http://www.investopedia.com/university/broker/
Tutorial: Online Investment Scams
http://www.investopedia.com/university/scams/
Related Terms:
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Boiler Room
http://www.investopedia.com/terms/b/boilerroom.asp
Broker
http://www.investopedia.com/terms/b/broker.asp
Bucketing
http://www.investopedia.com/terms/b/bucketing.asp
Churning
http://www.investopedia.com/terms/c/churning.asp
Circular Trading
http://www.investopedia.com/terms/c/circulartrading.asp
Front Running
http://www.investopedia.com/terms/f/frontrunning.asp
Penny Stock
http://www.investopedia.com/terms/p/pennystock.asp
Pump and Dump
http://www.investopedia.com/terms/p/pumpanddump.asp
Have a Great Day!
The Investopedia Staff
http://www.investopedia.com
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