How Insider Stock Buying Works
Insider trades affect stock prices—that’s common knowledge. However, not everyone has the time or the expertise to determine which trades insiders made that could possibly be informative.
That’s the information you’ll receive from Insider Trading Alerts, and here’s how it works.
How Insider Trading Alerts Work
Our subscribers look forward to the emails they receive at the end of every trading day. That’s because those emails represent the insider information they need to make their best buying decisions at the next open.
The Scanning & Analysis
Each day, the insider trading screener catalogs and parses over 2000 Form 4 filings. These are documents that a company insider is legally required to submit to the SEC and the information is made public domain.
This large amount of data requires a significant amount of analysis to understand what’s important. We look through all the details of these filings — from the industry to the position of the purchaser, to checking for stock grants and automatic purchase plans — to filter results down to the truly important ones.
After that, we apply more data analytics derived from close to a million historical filings. These analytics look at historical performance metrics, probability distributions, and the correlation of these stocks to the overall market. Some of these historical metrics are given to you each day so you can get an idea of possible expected moves based on historical performance. For each filing, we collect over 30 unique metrics geared toward identifying stocks with a possibly significant insider trade.
The Strategy
Our main goal is to identify stocks that are likely to pop out of the open due to an insider trade filing. This pop can often lead to anywhere from a 1% to a 15% increase the next day. If you’re looking for a longer-term swing trade, the information we provide can also be used to look for a company that may be on a downswing, but that insiders believe will improve over an extended time frame.
The Insider Information
At the end of each trading day, you’ll receive an email that will detail information about the insider transactions we’ve identified as significant. Some days (not often) we will not identify any promising insider trades. On other days, you will receive as many as 12.
The email you receive will be simple, containing two tables. The first will show insider transaction information, including how much was purchased, the stock ticker, and the current volume of the stock ticker so you can get an idea about liquidity. This table will also rank stocks based on their historical performance the day following other significant insider transactions.
The second table in the email will illustrate an overview of the stock’s performance on the day after other significant insider transactions with more granularity. For example, it will tell you what the average high and average low were for a stock alert in the past so you can see when the stock moves past historical levels. You’ll also find other data in this table, concerning the correlation of the stock to the overall market. This allows you to diversify away from the market if you’re interested in doing so.
The tables come with column headers that help explain what each column shows. You can quickly read through the table and see how much was bought, to what degree holdings increased, and what the overall historical performance rating is.
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