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Insider trading tips: how to use insider trading info as an investment tool
Insider trading involves those people that are directly and indirectly involved with a company, sharing information that is not publicly known to benefit an investment situation. Insider trading is illegal. End of story. While it may have been done in the quiet of a conference room or across a dinner table, the prosecution of some involved in insider trading has put a bit of a reduction in the practice. There are, however, methods that you can use that are legal ways to access insider trading tips. It requires some due diligence, but can be one of the best investment tools in your tool box.
The internet now offers excellent resources to locate legal insider trading tips. Always go to the website of a reliable source to view the financial profile page of a stock that you have interest in. If you view the ownership information, you can see the trade activity of the officers of the company. Unlike other investors, they are required by law to report their investments. Under the auspices of disclosure, the purpose of the report is to freely share their investments and eliminate the possibility of insider trading info due to internal information they may possess. Following the investment trends of the officers is an excellent gauge for your own investments.
From an historical standpoint, the officers of a corporation have accomplished an overall higher success rate of investing. It’s important to not only watch what they invest in but also what they sell. This can be a clue to a potential downtrend of a specific company and their stock. However, keep in mind that it may also simply be a change of direction for liquidity. Another key point to remember is that corporate executives may often buy stocks to keep them from under the scrutiny of insider trading accusations. In other words, to throw the bulldogs off the trail.
It’s not the best idea to follow one company and their executives, but a group of companies and watch for a buying or selling trend. An individual may have many reasons for their investment actions, but executives in a number of lines of business may create a trend that you can follow and emulate. A single executive could be going through a divorce or simply needs to realign the portfolio. It’s not advised to use this as an insider trading tool benchmark. Use these insider trading tips as a tool of guidance and don’t assume that anything is a sure thing. While executives tend to have successful investment endeavors, their insider trading info must be valued in the overall picture.
A tool that very few traders use that is incredibly useful is the commitment of traders report, published by the CFTC. It’s free and when used the right way, it shares the ups and downs in a surprisingly accurate method.
Investment of any kind needs to be blended with the type of economic market you are living in. Small changes in the markets do not alert you to anything. When large trend changes begin showing with aggressive buy and sell data, this is the signal for you to pay attention.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
|Investment Strategies22 Apr 2010|