What is Insider trading?


Insiders are individuals with access to non-public information about a company and are usually the Promoters, CAs, Employees etc. of it. Zerodha Insider Trading tool let’s you track any significant trade by insiders of listed NSE/BSE companies and keeps you updated on what people who are privy to more information than you are doing with their stock.

ZITIR (Zerodha Insider Trading Impact Rating) is a proprietary indicator which suggests what insiders are feeling about their company based on the trades they have made over the last 6 months — bullish, bearish or neutral


Hi Anil,

There is a very famous Hollywood movie called ‘Wall Street’ starring Michael Douglus as the infamous investment banker called ‘Gordon Gekko’. :slight_smile: He uses inside information, typically bribes employees of a particular company he is interested in to give him confidential information about the company, so that he may use it to profit.

Also insider trading refers to trading done of a particular company by an employee of that company itself. He may have more information then outsiders as he belongs to the company and may use this ‘inside information’ to profit in the markets.


Trading based on internal information of the companies is called insider trading.

‘Insiders’ are the people/ firms who have access to vital information [ex: policy decisions] of a company. Mainly they are promoters/ higher authorities in the company.

‘Insider trading’ stands for trades executed by the ‘Insiders’. Insider trading can result in huge fluctuation in prices, as the insiders can use the secretive information about the company for personal gain.


This is not a good answer. It’s off the topic and out of context. Makes no sense.

Insider trading means a person buys or sells a stock which is based on the information that is totally confidential. The person may be a corporate officer or a director employee or someone who has right to receive the information which is not available to the public. Generally, it is illegal but it can be legal if the trading is done on the basis of information which is available to the public.

Insider trading is considered as a malpractice where trading of a company’s stocks and securities is done by a person who because of their position has access to various valuable non-public information which can be important for making investment decisions. For better understanding traders can take help of financial specialist with their stock tips and trading recommendations which will help them to focus on right direction.

In economic theory, there is something call weak, semi-strong and strong markets. Weak markets are markets where future price prediction can be made using past prices. Most technical strategies believe that markets are weak, where future prices are driven by past prices. Usually markets can become weak in extreme situations where momentum or mean reversion works.

Semi-strong markets are where unpublished private and material information is relevant. This is where insider information is useful. Again - in almost all markets insider information is not illegal. Acting on insider information to make money is illegal.

Finally, you can have strong markets. Here every possible information is already in the price. These are very structural market dyanamics. Something like current account deficit leads to currency weakness. No matter if you have insider information, directionally the trade is still to sell the currency.

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