What is insider trading?

Insider trading refers specifically to the practice of buying or selling stocks based on material information that is not publicly available. This type of trading is considered illegal because it undermines market integrity and investor confidence. When individuals with insider knowledge trade shares, they have an unfair advantage over other investors who do not have access to that information. Such activities can significantly skew market prices and create an uneven playing field, leading to potential legal ramifications for those involved.

In contrast, the other options describe scenarios that do not fit the legal definition of insider trading. Legal buying or selling of stocks based on public information is an essential aspect of market operations and does not involve any illicit activity. Ethical stock trading practices would not involve the misuse of non-public information, and trading stocks in a public forum simply refers to standard market transactions, which also do not constitute insider trading.