How to Profit from (Legal) Insider Trading Signals
We all know that insider trading is illegal. This is because a company’s insiders, or people who have access to confidential information, can use this information to gain an unfair advantage.
For example, if the CEO of a company knows that it is about to report earnings that are better than expected, he or she could buy the stock because they know when the release comes out, the stock will probably have a large move upwards.
Fortunately for us ‘outsiders’, the SEC has enacted laws to prevent this type of activity.
When an insider buys or sells their company’s stock they need to inform the SEC of their intent. And that is why we can profit.
There are numerous reasons why an insider would sell their company’s stock. They could need the money for things such as buying a house, home improvements or paying off their bookies before some scary people come knocking at the door.
But an insider will only buy the stock for one reason. They believe they will make money!
When the insiders are buying, it could be a very bullish indication. After-all, who knows better than what is happening inside a company than an insider?
These stocks caught my attention due to the significant amount of insider buying that has recently occurred: