How To Stack the Odds In Your Favor By Following Insider Trades

If you’re new to the site, you might be wondering about the title of this post.

“Insider trading? Isn’t that illegal?”

Yes, in the Martha Stewart sense. Or the Enron sense.

But consider this: Many executives are compensated with company stock. So they’re bound to own some…

And sure, it’s unfair for them to trade their stock quietly… but isn’t it also a bit unfair to bar high-level employees from trading their own stock at all? 

Fortunately, to even things out, they have to share their trades with the public… and you can use this information to stack the odds in your favor.

Let’s take a look at this consumer name:

This stock has been in a freefall for the entire year…

But we just saw some key insiders pick up the stock, with one insider increasing his size by over 150%.

That’s great and all, but it’s been a nasty bear market. 

Sure, the insiders know their businesses well… but they aren’t traders. When the market’s selling off and correlations run to 1, it doesn’t matter how good your business is — it’ll be taken to the woodshed.

However, we can add to our edge by looking at the stock’s structure on a technical basis. It’s back to multi-year levels that have seen massive responses off this level in the past. 

If we get a bounce and it runs to our target on this Trading Roadmap, then we’ll see an increase of over 60% on the stock.

And the best part? 

Insiders are required to hold their positions for longer than six months, but we can take the money and run early.

That gives us all sorts of room to potentially outperform the insiders. We can get in later than them if we lock in a better cost basis (although not in this specific case since it’s already back to huge levels)...

Then, as I said, take profits whenever we want.

Just one more thing:

If you want to see how we trade these corporate insider moves, check out this free insider trading presentation.