When it comes to leading the field of trading knowledge, we must look to the decision makers, the movers and shakers of any company you are looking to trade or invest in. It is common knowledge that directors, officers and high level personnel are the first to know about any positive or negative changes in a companies direction.

While there are restrictions in how an insider may trade their companies stock, insiders are allowed to buy and sell shares of that stock. Insiders’ trading is quite different from “insider trading”. Insiders’ trading is the legal buying and selling of stock of the companies that employ them. On the other hand, “insider trading” is the illegal buying and selling of securities based on information that has not been released to the general public.

When it comes to your trading strategy, there are two situations that can be of significance when the trades of insiders are concerned.

A sudden increase of insider purchases can be an insight into expected earnings or growth potential, expected positive changes in the company’s sector, seasonal expectations or a number of other positive expectations. A good rule of thumb to remember is this: Insiders sell stock for as many reasons as there are reasons but they only buy for one; to make money.

Another important situation to pay attention to is this: If the insiders’ trading has been significant enough to be discussed in the news, it shouts… “pay attention to me”.

The most important clue to look for is “clusters” of insider buying. A cluster of insider buying is when you see three or more insiders buying stock at the same time on the open market. This is a powerful indication that “positive expectations” are on the rise.

If becoming an elite trader, so that you can quickly, easily and intuitively determine what to do when insiders begin to buy their own stock, is something that naturally appeals to you; then we would like to invite you to visit http://www.dartthrowtrader.com and enroll in our free – DartThrowTrader.com weekly newsletter.

By: Jimmy Slagle

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