Stock Market Glossary

Insider trading

Prohibited securities trading based on non-public information.

In brief: Prohibited securities trading based on non-public information.

Meaning in practice

Insider trading distorts markets, undermines trust and is punishable by law in virtually all industrialized countries. Even unintentional tipping (e.g. to family) can have criminal consequences.

Context for investors and traders

When analysing a company, this term is meaningful only alongside the business model, industry and development across several reporting periods. One-off effects, accounting choices and the corporate cycle can move individual metrics.

How to use this in practice

Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.

What to keep in mind

Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.

What does Insider trading mean in simple terms?

Prohibited securities trading based on non-public information.

When is this term relevant to investors?

Compare the development with earlier reports and relevant peers. Look beyond the absolute number to cash flow, debt and the assumptions behind management guidance.

What should I check before acting on Insider trading?

Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.

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