Who on here has dealt with stock trading or commodities trading?

 Specifically I am thinking of two movies : Trading Places and Wall Street Both movies have a character that fools another character into losing money by manipulating information very quickly on a hectic day of trading.

 Every time these movies show up in the rotation on my cable - I do my best to follow those scenes and the flow of information,  but it goes by kind of fast.




  * SPOILER WARNING *
 If you haven't seen these movies - but for pity's sake its been over a decade for both of them.

 Trading Places :  the Ackroyd and Murphy characters have the real information about F.C.O.J. crop forecasts they use that against the Duke brothers . That I get . but, What was the actual process in the trading scenes?  
Could someone pull off that similiar scheme today ?
 Or in the future?  (I'm thinking about trying to do a different kind of climax/acton scene for an RPG.)

 In the movie Wall Street , the Charlie Sheen character seems to be doing a similiar scam on the Gordon Gekko character at the enbd of the movie.  To me it looks like that same style switcheroo - just using  shares or stocks instead of commodities in that story. (The Airline big deal trade at the end)

 How did that version work?

 Are commodities and stock trading really that much alike? It sure seemed like one scriptwrter copied the gimmick from the other , maybe even unintentionally.
 Again, has the rules of the market changed that much since the movie was made?
 Could a similiar "sting" work these days?
 Twenty to fifty years from now could it work?

 Anyone know of a web page or site that breaks down those scenes into layman's terms?

- Ed C

I believe that is called insider trading and people go to prison for that. It is why you, as an employee of a publicly traded company, must be very careful about investing in your own company. I believe different rules apply to privately held corporations. All this is relying on college courses I took some 20 years ago.

Now, I am not terribly familiar with the movies so understand, this does not apply to public knowledge. So, if there is a press release or the information is part of the companies public disclosure then you would be o.k.

That said, the factor that is important to take into account is not so much the legality as the difference in tech from the 80s. Information moves much faster nowadays.

Bill

I figured it was inside trading or "Inside info" trading going on.

 Just was hoping someone could explain the process mechanically - how they did what they did.

 Usually with most movies I can spot the scam or con before the scriptwriter explains it to the viewers.

- Ed C.

Some interesting but unverified info on Wikipedia:

http://en.wikipedia.org/wiki/Wall_Street_(film)

Thanks Droog, you did point me in the right direction.
 I used to be a wikipedia ddict - and I forgot to even look there.

 Here is a pretty good explanation of the climax of Trading Places :

Explanation of climax scene
With the authentic orange crop report indicating a good harvest of fresh oranges, frozen concentrated orange juice (FCOJ) would be less important to food producers and so would be likely to drop in price once traders heard the news. However, by way of a fraudulent report, the Duke brothers are led to believe that the orange harvest would be less successful, necessitating greater demand for stockpiled FCOJ in orange products in the coming year, thereby driving the price up. By capitalizing on this knowledge (and the Duke brothers' missteps), the protagonists are able to profit by manipulating the futures market as follows:

Like conventional stock, futures contracts can be sold even when the seller does not yet own any of the commodity. A contract to sell, say, 15,000 pounds of FCOJ at $1.50 per pound in February merely indicates the seller's obligation to provide and the buyer's obligation to purchase the product at the specified price and time. It does not matter how or where the seller gets the product, as long as, one way or another, he is able to provide it at that price at that time, even if it results in a sale at a loss to him.
In this case, Winthorpe and Valentine first "sell" FCOJ futures at roughly $1.45 per unit, a price inflated by the Dukes themselves (the Duke Brothers' buying leads other traders to believe that the Dukes are trying to corner the market, causing a buying frenzy). Then, when the price falls first as a result Winthorpe and Valentine's eager selling, then to a much greater degree upon the release of the real crop report indicating a good harvest, Winthorpe and Valentine buy futures at roughly $0.22 per unit. Thus, for every future unit they had previously sold at $1.45, they purchase a matching amount for only $0.22, resulting in a profit of over $1.20 per unit (over 545%). Though it is not stated in the movie exactly how much they make, if they invested roughly $500,000 from a combination of Winthorpe/Valentine's investment, the Duke's money from buying the "fake" report from a fake Clarence Beeks (Paul Gleason) and Coleman's and Ophelia's savings, they would have turned it into over $2.7 million. It is strongly implied that they purchased additional futures on margin and made dozens (or hundreds) of millions more, since a lesser amount would not bankrupt the Dukes.
At the same time, the Duke brothers purchase enormous quantities of FCOJ futures, even at relatively high prices, because they incorrectly expect that the crop report (falsely suggesting a greater need for stockpiled orange juice) will create a demand at even higher prices, securing them a profit. When it turns out that the leaked report they were given was fraudulent and the true report is revealed, the price begins to plummet before they are able to sell off their contracts. So, they are left with an obligation to buy millions of units of FCOJ at a price more than a dollar per unit higher than they can sell them for, bankrupting them. The Dukes too, are trading on margin, in order to magnify their profits (or losses, as it turns out). The first words that the exchange representative says to them after their disastrous trading session are "Margin call, gentlemen," requiring them to deposit more money with the exchange to cover their open lossmaking position. Randolph whines, "You know very well that we don't have $394 million in cash!" Since their open position is hundreds of millions of dollars in the red, they have no further margin to deposit, they are effectively ruined, Mortimer's screams of "turn those machines back on!" notwithstanding.
The $1.20 per pound price change on FCOJ futures that generated Winthorpe and Valentine's huge profit would be unlikely in the real FCOJ market. The exchange that houses the FCOJ futures trading imposes a daily limit of 10 cents per pound on the price movement of the near month contract from its previous day's settlement price. Most commodities futures contracts have daily limits. After the FCOJ price is 10 cents away from the prior settlement price, trading is halted and the market is referred to as "limit up" or "limit down". Trading reopens if prices are again within the limit, and the next day the price can change 10 cents again. The price limit can be widened under certain market conditions.


 - Ed C.