Daniel Hai

About the Author Daniel Hai

I am a financial quant analyst using systematic data to identify investment opportunities in the long and short term. I write about stocks, ETF's, commodities and currencies. I hold an economics degree from the university of Berlin and specialize in C#/VBA trading algorithms.

How to Use Corporate Insider Transactions to Day Trade like a Pro

When people use the term “day trading”, they refer to the act of buying and selling a stock within the same day. They generally trade highly liquid stocks or indexes, with leverage being fairly common. Due to the increased risk involved, especially from the higher transaction costs, day-traders often fail to make a profit. This is especially true for beginners who use strategies which are too aggressive and expect unrealistic returns.

TipRanks has been working hard to develop a model which consistently outperforms the market. In the learning process one conclusion was fairly clear: using technical analysis is a losing strategy over the long run. With this in mind they investigated other market phenomena, and made a very unique discovery. By copying very specific insider transactions after they are released by the SEC, one can make consistent gains at a very low risk one day after the transaction.

Returns_DailyInsiderAfter much testing, an advanced scaling system which takes into the account the insider’s position in the company, as well as his historical performance was built. The system filters out fundamentally risky stocks, very low volume stocks, and overly volatile stocks. When the model was finally complete it didn’t resemble any other strategy out there, it is a truly unique system in every sense.

The final result is the DailyInsider, the first premium newsletter by TipRanks, as well as the first audited newsletter online. It is true that most investors lose money day trading, but it is also true that those who don’t make huge profits. Exactly how much? Below are the real returns of the model, which buys four stocks evenly at market open, and sells them before the close.

As you can see in the equity chart below, the strategy rarely encountered a significant decline, with the most recent crash barely effecting returns.


Finally, measuring the opening and closing price does not reflect the actual expected return, as the strategy is highly vulnerable to trading costs being able to spiral out of control. For this reason we have included them in our equity, meaning the above 542% reflects the net profit. Without trading fees (we use Interactive Brokers commissions) the strategy would return over 700%.

You can click HERE to learn more about the DailyInsider and become a part of a new pool of informed, consistent, and profitable day traders.