Follow the insider purchases could be very profitable. No one knows the company and the sector better than the insiders of the company.The following represent good hints and traps of using this information.* Ignore most sales as insiders sell the stocks for different reasons such as diversification, buying a mansion, divorce settlement, etc.* Only consider sales if insiders are dumping most of the owned stocks. In this case, you want to short the stock.* Consider the net purchases (= Total Purchases - Total Sales).* Only consider purchases close to the market prices.* Ignore all options.* True insiders are officers such as CEO and CFO.* 'Cluster purchases' is a better indicator.* Consider market timing. When the market is going to plunge, all stocks most likely will go down.* Consider basic fundamentals. If the fundamentals are bad, the stock most likely will not rise. There are exceptions such as approval of a new drug or unexpected profit.* Consider technical analysis, charts.Last Updated: 11/2016 Size: 60 pages (6*9)
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