By and large there are two classes of stock market investors who have the greatest influence upon prices. They are the public and insiders. Both these groups in general  are having large number of investors/traders.

The public portion of the trading element is made up of all those individuals throughout the entire world who buy and sell stocks in the market either for investment or speculation but rather than in "unprofessional, casual and emotional manner".

The insider portion of the trading element is made up of those individuals, groups or associations who are professional at the task and who make the buying and selling of stocks as a business or profession. The word "insider" is not necessarily a bad element or unscrupulous element of the market. But one thing need to be clarified that here the definition of the "Insider" is not taken in purely negative manner. Insiders are welcome elements of the market. This term should not be read in the context of the definition of "Insider" by "SEBI" or any other Security commission. Its a general and  vague term, and those who holds vital information or those who get access to the price sensitive  information before general public does, are called as "Insiders". Many of the times, it could happen that, few investors genuinely know something about the company or a stock, by default, before the general public knows. In short "Insider" element of the market is not bad and also difficult to get away from the market, whether its India, USA or any other country.

There is no clear-cut dividing line between the two groups. A man who works for a Pharma company, innocently becomes insider while trading in other Pharma company because he understand the "business model" of pharma companies. Likewise  stockiest or a Distributor  of the FMCG company, by defaults becomes a "insider" from theoretical point of view, as he knows the demand/supply of the products of the company. But when the same Distributor trades in a "Software" stock, he belongs to other category i.e. "Public".

It is not surprising to see why the insiders are generally more successful in their market operations than the public. They are minority with respect to numbers but they are much better organized and equipped than public. Their potential funds employed in the market is probably a good deal  but relatively smaller than the entire funds employed by public. Yet their small capital is hundred-fold more potent in its purpose because it is professionally organized, it is well focused and managed and put to use by compact, individuals with definite aim in view. The definite aim of these insiders is restricted to raising or lowering the prices of one specific stock, a group of stocks or even the entire market but it is definitely directed its principal goal of making a profit for the insiders/group members. And this aim is achieved by acting in two ways. The insiders must buy stocks from the public and sell them back to the public at much higher prices or they sell stocks to the public and buy them back at much lower prices.

If the insiders are able to do this with consistency then it stands fairly apparent  that the opposite element in the market, the public, is going to lose the money that the insiders make through their "profitable and professional" operations. In other words, the public is the "Goat". Many people will not accept this but this is the naked truth, happening all over the world, irrespective of its stocks, commodities or any other traded security.

The insider element  look towards market from very professional angle. Because this is their livelihood, their income. They must make comfortable margin of average profit to remain in the business. The unsuccessful insiders therefore drop out, but the successful ones remain to make up the group which takes its major living by buying and selling stocks to the public for a fairly consistent profit. The insiders does not always make a profit. He makes mistakes too, but they are in the minority. Another important aspect is that, public does not always lose.  So the statement that "when insiders gains, public loses" is a wide and general one. There are many instances where both campaigns make profit.

So, in short, "Insiders" always makes fantastic gains in the market by trading or by investing in the stocks/market well before public knows the potential upmove. And reap the harvest, selling the shares to public at very high price. The same is true while selling the stock. Insiders sell quickly, near to the top of the market, and buy the same stocks when "trapped" public sold it at throughway prices. Insiders accumulate the stock, marks up and then distribute them to the "Public". The bears insiders distributes, marks down and then accumulates. The former makes a profit by buying stocks from the public, advancing their market price, and reselling them to the public. The latter profits by selling first to the public and buying at cheaper rates from the public.

The public, of course, is by no means always the same set of individuals but it is the same general class of individuals.  Further we must understand that "Insiders" are not dishonest or unfair in advancing or depressing the price of their fevered stock. On the contrary, if the insider made its analysis correctly the stock will move in the right direction largely of its own fundamentals. Stock charts helps us to detect such professional operations and to take "right" side of the market to trade/invest. "Technical analysis" is the only tool which uncover the "insider" activity on any stock (remember any stock) by studying the demand/supply , accumulation/distribution patterns.

These "insiders" creates such a environment (with the help of commercial media or market actions, volatile moves in the price) where common investors are refrain to buy the stock in bullish trend and "hooked" to buy the stock when the trend is bearish. In simple terms, they creates a environment where investor are averse to buy the stock in bullish trend and averse to sell in the bearish trend. For example, when tech stocks just started their bearish trend in March 2000, the media and overall market was very bullish about technology sector. The news flow was strongly bullish, the headlines were bullish, almost all analyst were advising to buy tech stocks for "long term", mutual funds were busy in floating "tech specific" funds. In short the climate & the mood was strongly bullish but prices were coming down slowly and steadily. In short, either investors were buying the tech stock or refrain from selling. But at the same time these "insiders" were distributing stocks at every opportunity. In fact, in case of many "Nasdaq" listed companies, the promoters of these companies had performed major role in "creating enough supply" of stocks in the market.

After 9/11, the situation has turned completely opposite. Mood on the street was amazingly bearish (at least no one was thinking bullish), market pundits were busy advising sell calls. But "insiders" were grabbing the stocks literally at throw away prices. Tisco was quoting at Rs.47, Infosys at Rs.553, Satyam at Rs.113, Ranbaxy at Rs.383 & Sensex was 2600. Now check out the present rates, and find out whereabouts of "Bin Laden" if you can.

Best example is the week(07.04.03 to 11.04.03) in which "Infosys" crashed more than 40%. Remember 40% erosion in the value in just 5 trading sessions. All leading fund houses, best of best analyst had sold the stock in that week because of the warning given by the management of the company. Now check out the prices for that period, the low made by the stock in that week i.e. Rs.605 is "the lowest close for last 2 years and since that week stock prices has jumped more than 400%. "Insiders" were made killing gains in that period by grabbing the stock by taking advantage of "nervous mood" of the investors.

Become an insider:

There is a simple route to became a insider. Just be a insider itself. Or  Read the actions of insiders minutely. Observe what they are doing, what they are buying/selling etc. Or became member of mystock. As technical analysis helps the investors to overcome this lack of inside information, and one can easily become an insider by knowing the strength of the market, directional trend of stock, placement of bulls and bears in the battle field with the help of price charts.. Study of chart reveals the strength or weakness in the stock, which ultimately tells us who is more powerful, bear or bull. For e.g. after a frenzied bull run, "Public" becomes active buyer and "Insider"  are quietly offloading the stock. The same is true when prices are falling consistently over the time, "Public" elements starts selling their holding in panic and frustration, while "Insiders" starts fresh accumulation. Technical analysis helps us to understand from the price behaviors that whether it is a distribution (Selling by insiders) or accumulation (Insider buying) happening in a particular stock or in a market. Became insider. Join mystock.