Everything You Need To Know About Insider Trading

Insider trading is a common phrase in the financial world. It means that an investor has been privy to some valuable information that could affect the value of a stock. In other words, insider trading is when you know something about a company that isn’t public knowledge and then use that information to trade stocks or other securities in that company. A typical confusion is that insider trading is illegal. However, there are two types of insider trading. One is legal, and the other one is illegal.

Legal Insider Trading

Legal insider trading is when insiders trade the company's securities like stocks, bonds, & so on and report the trades to the authorities like the Securities Exchange Commission (SEC). A long list of people fall into this category - managers, directors, employees, beneficial owners, and people associated with the firm in other huge ways. These people are permitted to trade the securities of their firm, given that they are not possessing material, non-public information. Trades made by corporate insiders should be documented within two business days in the U.S. and must be filed with the Securities and Exchange Commission. While these trades shouldn't contain material information, many people believe that these trades reflect information that isn't sufficiently material to be delivered in any case. Academic studies also show that insider trading can predict future stock returns and income.  

Illegal Insider Trading

Illegal Insider Trading is a type of trading securities using value-sensitive information which isn't accessible to the public. It is important to know that while insider trading does not depend on nonpublic information, illegal insider trading is related to private information and it is considered as a sort of wealth transferring from uninformed investors (outsiders) to informed investors (insiders).

Who is Considered an Insider?

A person is viewed as an insider of a public company in four circumstances. To begin with, every directory or senior officer of a public company is an insider of that company. Second, any person who owns more than 10% of the voting rights of a public company, or activities control or heading more than over 10% of the voting rights of a public company, or a combination of both, is additionally an insider of the public company. Third, a subsidiary of a public company is viewed as an insider of the public company. Fourth, if a company is viewed as an insider of the public company, the chiefs, and senior officers of the inside company are also viewed as insiders of the public company. When someone becomes an insider of a public company, they are needed to file an underlying insider trading report with the appropriate provincial securities regulators. Insiders must also file an insider trading report with the appropriate provincial securities regulators within 10 days of the trading date of that company's securities.

How to use legal Insider Trading for your benefit?

In conclusion, the way to profit from legal insider trading is to identify the most informative transactions. By identifying these trades, investors can work on their odds of catching alpha altogether.

It's worth pointing out that the most ideal method to use insider transaction information is to combine it with different types of investment analysis. When used in conjunction with different information, insider trading can truly give an edge.

Spiking Wealth Management Software

Spiking launched in 2016, Singapore's first financial technology and educational software that uses artificial intelligence (AI) to reveal legal insider trading insights. Spiking aims to create a product with an exceptional return on investment. With this in mind, Spiking Wealth Management Software was born.

The Spiking Wealth Management Software uses proprietary data to track the legal insider trading secret strategies and tracks 8 exchanges (SGX, HKEX, BM, SSE, SH, NYSE, NASDAQ, AMEX) which covers over 10,000 companies, approximately 7,700 funds, 12,000+ Billionaires (in their respective currencies) and has information on over 255,000 Insiders across the globe.

Some of these Spiking Insiders include Warren Buffet, Cathie Wood, Temasek Holdings.  It's important to know when these industry giants are moving their stocks to make sure you don't miss out. They are known to take advantage of market volatility for their potential and benefit. Spiking Wealth Management Software works progressively to alert you as soon as any trading information becomes known so that you can make informed trading decisions and profit! This makes it one of the best insider trading analysis products. Discover Legal Insider Trading Insights and learn how to invest like a trading giant today.

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