"On the curb" is a term that is sometimes used in finance and investing circles. The term has to do with the process of trading certain types of securities without actually going through a stock exchange. This approach to trading securities is sometimes helpful when investors wish to continue trading even after the exchange has closed for the day, or for arranging trades on weekends when the exchange is closed.
While there is some difference of opinion on the origin of the term, being on the curb is typically associated with investors choosing to do business on the street, directly outside an exchange that has closed for the day. Here, the image is of investors who leave the exchange as it closes, but who wish to still conduct some amount of business before ending the day. While literally standing on the curb outside the front door of the exchange, buyers and sellers strike deals that are then finalized as soon as the market opens the next business day.
On the curb trading has a long history in the world of investing. Sometimes referred to as trading among gentlemen, the practice made it possible for buyers to obtain securities prior to the start of the next business day, effectively strengthening their position within the marketplace at the onset of the next day’s trading. At the same time, sellers who wanted to divest themselves of securities that they believed would undergo a significant downturn the next day could sometimes sell those shares on the curb and avoid taking the loss when the markets opened and active trading got underway once more.
With the advent of investing via the Internet, the nature of on the curb trading has taken on a new dimension. At one time, this practice was somewhat limited, in that the trades were made face-to-face between investors or their agents. Today, it is possible for investors to establish deals electronically after the main operating hours of the exchange, completing all necessary components of the transaction prior to the start of the next trading day.
As with any type of investment approach, choosing to make a security purchase on the curb requires understanding the current status of the securities in question, and making an accurate projection of where the value of those shares will move after the transaction is complete. This includes assessing the degree of risk associated with the asset, in relation to the potential return. By making prudent use of this approach, it is sometimes possible to secure assets just before they experience a significant upturn in value, earning considerable returns from the on the curb trading.