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GM. Welcome to Boring Data.

Buckle up we’re going to have an interesting couple of weeks testing and fine tuning this strategy.

Here’s what i’ve got for you today

Table of Contents

• $10k Paper Trading Account

  • Insider Trading Strategy:

  • The Letter Grade System:

• Example of an A Trade

• Final Thoughts

$10k Paper Trading Account

I’m going to test this strategy in real life with you guys. Updates will happen 3x times a week. For this system specifically, we will utilize 6 variables (listed below). From my data collection, I’ve found these to be the most important for overall price movement. All these trades are swings, and all will be done on a webull paper trading account. If this strategy is a success, we’ll add real $$$

How will I know if this strategy is a success?

• Indicator: if the strategy outperforms relevant market benchmarks (e.g., S&P 500).

• Why it Matters: Beating the benchmark shows that my strategy is adding value beyond what could be achieved with a passive investment.

Insider Trading Strategy:

Types of variables that I keep in mind

1. Type of Insider: I keep an eye on the big players – executives, directors, and large shareholders. They’ve got the inside scoop on the company’s moves. When high-ranking executives make trades, it’s usually worth noting.

2. Size of the Trade: Bigger trades by insiders often mean they’re confident about the stock. So, the larger the trade, the stronger the signal.

3. Trade Type: Insider purchases are usually a good sign (they’re betting on the company’s success). Sales aren’t always bad – they might just need cash for personal reasons.

4. Frequency of Trades: If insiders are trading often, it can indicate a trend or pattern. Frequent trades might give us clues about what’s happening behind the scenes.

5. Timing of Trades: If multiple insiders are purchasing a stock the same day, or even the course of a few days.

6. Company Performance: Look at how the stock has been doing. Insider trades in a stock that’s been underperforming or outperforming can give us different signals.

The Letter Grade System:

1. A+ Setup: Top-notch trade with the highest potential.

   • Type of Insider: High-ranking executives (e.g., CEO, CFO)

   • Size of Trade: Large, significant trades

   • Trade Type: Insider purchases

   • Frequency: Consistent, multiple trades in a short period

   • Timing: Well-timed around key events (e.g., just before earnings)

   • Company Performance: In line with positive market trends or strong fundamentals

   • Risk-to-Reward Ratio: 1:3 or higher

2. A Setup: Strong trade with great potential.

   • Type of Insider: Senior management

   • Size of Trade: Substantial trades

   • Trade Type: Mostly purchases

   • Frequency: Frequent trades

   • Timing: Around important company events

   • Company Performance: Positive or recovering from a dip

   • Risk-to-Reward Ratio: 1:3 or higher

If I’m feeling a little spicy I’ll throw in a couple of B setups trades. But one thing that will not change is the risk-to-reward. All risk to reward will be 1:3.

1. B Setup: Good trade with decent potential.

   • Type of Insider: Mid-level executives

   • Size of Trade: Moderate trades

   • Trade Type: Balanced between purchases and sales

   • Frequency: Regular trades

   • Timing: Linked to some company events

   • Company Performance: Mixed or stable

   • Risk-to-Reward Ratio: 1:3 or higher

Example of an A Trade

Let’s see if $TMCI fits our criteria for an A trade:

High Ranking Insiders ✅

• TMCI has trades made by high-ranking executives, providing confidence in the insider information.

Large, Significant Trades ✅

• The trades are substantial, indicating strong conviction from insiders.

Trade Type: Insider trades ✅

• The majority of the trades are insider purchases

Frequency: Consistent, multiple trades in a short period ✅

• Trades were made within 10 days of each other

Timing: Well-timed around key events (e.g., before a catalyst) ✅

• Earnings August 6th

Stock is recovering from a dip ✅

The stock fell to 52-week lows and aggressively bought up. Gap to $10

Risk to reward: 3:1 ✅

Final Thoughts

There is shockingly very little information on what to look for and how to trade with insider setups.

It’s going to be fun couple of weeks testing this strategy out, hopefully we can all benefit from this. Thanks to all our new reddit friends for helping me come up with this idea.

Remember, do your own DD and trade responsibly. I suggest you do a paper trading account along side me so we can learn together.

Jim Cramer Pic of the Day:

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.