New Investment Tool Idea

[investingphil 10]

Hi,

 

I am a programmer by trade, but have been doing some unfocused trading, myself over the last few months. With what I have read during, y self-educating research, a trader who ecpecta to be successful, whatever that means to him/her, must have a system and must stick to their system.

 

I have been trying to identify a system tha t will capture insider trades from sec website, then allow me to add additional indicators and then screen those stock a that have insider trades to ultimately produce a watch list for potential investments and then notify me immediately by text/email when a stock reaches a certain threshold so i can then make a buy decision.

 

I have not been able to identify a system like this and, so, am hoping someone hear knows of one. If not, I may endeavor to write my own.

 

Ideally it would test the indicators the moment it sees the insider trade on the sec website and then if its a "good find", immediately send me an email and txt message alert. Hey, if it can enter my trade for me, that would be even better.

 

Does anyone here know of such a system and, if so please share the info? If not, is anyone here willing to help me design such a system? I can build it, no question, but I don want to reinvent the wheel.

 

Thanks for your input.

 

Dave Phillips

 

 

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[investingphil 10]

I could really use some feedback on this. I'd like to hear what others think would be good indicators to use, along with the insider buy, to determine if its a serious stock to look at. Please let me know if i posted in wrong forum.

 

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[MadMarketScientist 11]

I could really use some feedback on this. I'd like to hear what others think would be good indicators to use, along with the insider buy, to determine if its a serious stock to look at. Please let me know if i posted in wrong forum.

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There are some web services that will gather this data for you and send you the info.

http://www.insider-monitor.com/

http://www.insider-transactions.com/web/Home.asp

 

As far as trading on this information, I am sure this is part of hedge fund\trading firm's strategies ...

 

As far as indicators, things I would look at are:

- there is a strong inverse relationship between the size of the firm and the usefulness of insider activity. Smaller companies provide more market outperforming information given they are less efficiently priced

- how close to an earnings call (before, after?)

- if these transactions are part of a a pre-defined schedule

- insiders have a better understanding of the economics of their business and top executives (CEO, CFO) have the most accurate record

- large shareholders provide the least predictive value but shouldn’t be ignored in my opinion

- purchases contain more information than sales but multiple insider sales with a high short position can reveal potential company negatives

- consensus activity increases the predictive information of the trades

- the size of the transaction is proportionally important

- analyze open market transactions and ignore private transactions

- it seems logical Insider activity within certain industries such as biotechnology may provide more directional information but again just speculation. the thesis is management understands the science and future possibilities of new drug breakthroughs or ability to pass future FDA hurdles

 

MMS