Penny stocks, defined as stocks trading under $5 per share, offer traders huge upside potential but also carry significant risks. One strategy used by some investors to identify promising penny stocks is tracking insider trading activity through SEC filings. Insiders like directors and officers are privy to material nonpublic information that can give them an edge in timing their trades.
This article explores using insider activity to find penny stocks, along with the risks, rewards, and best practices for making sound investments. We also take a closer look at a handful of penny stocks to watch after recent bouts of insider buying.
This post originally appeared on PennyStocks.com.