In share trading, contra is the buy and subsequent selling of shares without payment. One is given 3 days to pay up for shares that have been bought. If one sells the purchased shares within these 3 days without paying or "picking up", this is known as contra trading.
Assuming you bought $10,000 worth of stocks at $1 on a Monday. On the Wednesday, the price went up to $1.05 and you decide to sell it off. Based on this, you do not have to pay up for the $10,000 because you have already sold the stocks. In fact, the firm would credit to you 5cents of profit per share, all without you putting up a single dollar. Literally making money out of thin air.
The dangers of this is that most investors would not be able to understand the risks involved, and would end up buying more than they can afford. Do note, that most contra traders actually lose money.
Labels: contra