My definition for it (and you can likely find a better one someplace else from someone alot smarter then me, lol)
crosstrading is an officially illegal practice or offsetting a sale or purchase of stock with another trade for the same stock, often 'off the record' or through alternate sources. (IE. another marketmaker, a standiing order, hedgefund supplier, the company themselves.)
Basically, the marketmaket gets an order for some stock XYZ which he fills at the prevailing market ASK price of $1.00, while at the same time knowing he can access/buy more of the stock from another seller for less, say $.90 The seller is most frequently the company themselves, or a marketmaker who is liquidating on behalf of the comapny themselves, or in some fictional case a shortseller or hedge fund who will sell into any volume to depress the price. (some people really believe that happens alot).
While it is an illegal practice, grey variations of it still occur and some argue over whether it is truly unethical and should be illegal. It's hard to avoid in some cases.
If I know a farmer who sells eggs for $1 a dozen, and you mention to me at work that you would sure like to buy some eggs for $1.25 then should it be illegal for me to crosstrade you eggs and make myself .25 a dozen? Similar situation with a different commodity which makes the practice sound harmless and a common economic activity outside the stock market.
Robert
ps. ( I notice i use brackets alot, lol)
There are no good stocks, only good trades.
