Insider Trading

Insider trading is when a company’s insider (someone who works there - like the CEO or the CFO, who knows important information about the company) uses that information to make money. For example, if a company were about to make an announcement about a big deal (like selling a product) or an announcement that their profits were going up, the insider might buy stock in the company before the announcement, hoping to make money when the stock price goes up. It's similar to someone hearing a rumor that something good is about to happen to a company, and then buying stock before the rumor comes out, so they can make money when the news is announced. Insider trading is not allowed because it's unfair - it gives insiders an advantage over other investors who don't know the information ahead of time. That’s why governments have laws against insider trading.