Signal Methodology
DisclosureSignals converts raw SEC and Congressional filings into a single 0–100 signal score. Higher scores mean the transaction is more likely to be material and non-routine.
Data Sources
Insider purchases, sales, grants, and exercises reported by officers, directors, and 10% owners.
Stock transactions disclosed by members of the U.S. House and Senate.
Quarterly institutional holdings for tracking smart-money positioning.
How Form 4 Trades Are Scored
Each Form 4 transaction starts at 0 and earns points based on the factors below. The final score is clamped between 0 and 100.
1. Transaction Type
| Code | Meaning | Points |
|---|---|---|
| P | Open-market purchase | +30 |
| A | Grant or award | +20 |
| M | Exercise + hold | +15 |
| S | Open-market sale | +10 |
| G | Gift | +10 |
| F | Tax withholding | -10 |
2. Insider Role
| Role | Points |
|---|---|
| CEO / CFO | +25 |
| COO / President / Chairman | +20 |
| Director | +15 |
| Officer | +10 |
| 10% Owner | +5 |
3. Trade Size
Dollar value = shares × price per share.
| Dollar Value | Points |
|---|---|
| ≥ $1,000,000 | +20 |
| ≥ $500,000 | +15 |
| ≥ $100,000 | +10 |
| ≥ $50,000 | +5 |
| Any positive amount | +2 |
4. Share Count
| Shares | Points |
|---|---|
| ≥ 10,000 | +10 |
| ≥ 1,000 | +5 |
| ≥ 100 | +2 |
5. Cluster Buying Bonus
When multiple insiders buy the same issuer within a 5-day window, it indicates broader management conviction. The cluster bonus is added on top of the base score.
| Cluster | Bonus |
|---|---|
| 3+ senior insiders (CEO/CFO/COO/President/Chairman) | +20 |
| 2 senior insiders | +12 |
| 3+ any insiders | +8 |
| 2 any insiders | +5 |
6. Noise Penalty
Routine transactions are flagged as noise and penalized. Noise filings do not generate alerts.
- 10b5-1 plan trades
- Automatic / scheduled transactions
- Tax withholding or vesting
- RSU grants and option exercises
- Gifts and inheritance
7. Purchase After Long Silence
When an insider returns to buy after a long quiet period, it often signals renewed confidence.
| Silence | Bonus |
|---|---|
| ≥ 12 months since last purchase | +15 |
| 6–11 months | +8 |
| 3–5 months | +4 |
8. Size vs. Insider's Own History
A buy that is unusually large relative to that insider's typical purchase size is more meaningful.
| Ratio to median prior purchase | Bonus |
|---|---|
| ≥ 5× | +15 |
| 2–4.9× | +8 |
| 1.5–1.9× | +4 |
9. Position-Size Increase
Buying enough shares to materially increase an insider's stake shows conviction.
| Increase in position | Bonus |
|---|---|
| ≥ 100% (doubled) | +15 |
| 50–99% | +10 |
| 25–49% | +5 |
10. Discretionary (Non-10b5-1) Purchase
Pre-scheduled 10b5-1 plan trades are routine. A discretionary open-market purchase is a stronger signal.
| Condition | Bonus |
|---|---|
| Open-market purchase (P) with no 10b5-1 / automatic language | +10 |
How to Interpret the Score
| Score | Meaning |
|---|---|
| 80–100 | Very high conviction. Large purchase by senior insider, often with cluster support. |
| 70–79 | High conviction. Strong purchase worth monitoring. |
| 50–69 | Moderate. May be worth watching but lacks one or more strong factors. |
| 0–49 | Low signal. Usually routine grants, small trades, or sales. |
Roadmap Indicators
Additional indicators under evaluation:
- Buy after significant price drop — "blood in the streets" insider buying
- Congressional cluster buying — multiple members buy the same stock
- Short-interest context — high short float + insider buying
- Sector/industry cluster buying — multiple companies in the same industry
Not Investment Advice
Signal scores are a quantitative filter, not a recommendation. Always do your own research before trading. Insider activity is one input among many.