Insider trading is the illegal practice of gaining insider information to make profit from derivatives of the financialmarkets. It is associated with gaining information for which is out of bound to other investors and as such is considered bad practice in the financial markets. For example a government official whom works for the state cannot buy or sell shareor any financial instrument. In most countries it is most brokerage firms do not permit government officials to open trading accounts because it could give them access to insider trading. Government officials have countless numerous accesses of advance and ahead database and forsight; it would be quite unfair to other participants of the financial markets and they would lack transparency.Insider trading is considerd to be some of the most vicious way of creating illegal proceed from trading the financial markets. The practice remains a problem for institutional, retail and other investors because insider investors make arbitrageprofits from insider trading. Arbitrage is a financial term referring to when free money is handed out in the capital and money markets.