What is Form 4? How to Track Insider Buying and Selling
Learn how to read Form 4 filings, understand insider trading patterns, and use this data to inform your investment decisions.
When a CEO quietly buys a few million dollars of their own stock on the open market, they’re not doing it for fun. When an entire leadership team unloads shares before a major announcement, that’s rarely random either.
In the U.S., these moves leave a paper trail. Form 4 is that trail. It’s the SEC filing insiders must submit whenever their ownership changes—buys, sells, option exercises, grants, and more. For investors, these filings are a way to see what the people closest to the business are actually doing with their own money.
This guide walks through what Form 4 is, who has to file it, how to read it without getting lost in the tables, and how to turn insider trading data into a useful (but not over-weighted) part of your research.
What Is Form 4?
Form 4 is the “I just changed my stake” report for insiders.
Whenever someone covered by Section 16 of the Securities Exchange Act changes their beneficial ownership of a company’s securities—by buying stock, selling, exercising options, receiving RSUs, or making certain transfers—they have to tell the SEC on Form 4.
A few core facts:
- It must be filed within two business days of the transaction.
- It applies to officers, directors, and 10%+ beneficial owners.
- It covers any change in beneficial ownership, not just classic buys and sells.
- You can see every Form 4 on SEC EDGAR and via tools like Earnings Feed’s insider hub.
That two-day deadline is key. Unlike annual or quarterly reports, Form 4 filings show up while the trade is still fresh, which makes them much more timely as a signal.
Who Counts as an “Insider”?
“Insider” in this context doesn’t mean “anyone who works there.” The SEC definition is narrower and more precise.
Officers
These are the people with real policy-making authority:
- The CEO, CFO, COO, and President.
- The principal accounting officer or controller.
- Any vice president who runs a principal business unit or function.
Job titles matter less than the underlying authority: if the person can make important decisions about the business, they’re likely in this bucket.
Directors
Every member of the board of directors is a Section 16 insider, whether they’re:
- Independent directors brought in from outside, or
- Executives who also sit on the board (for example, a CEO who is also Board Chair).
These are the people overseeing management and representing shareholders. Their trades are part of the picture.
10%+ Beneficial Owners
The third group is anyone who beneficially owns more than 10% of the company’s voting stock. That can include:
- Activist hedge funds.
- Founders and early investors.
- Private equity firms and corporate parents.
“Beneficial ownership” goes beyond shares in someone’s own name. It also captures stock owned through trusts, family members, shell entities, and other structures the person effectively controls. The SEC cares about who really controls the shares, not just the name on the account.
Anatomy of a Form 4
A Form 4 looks intimidating at first glance—lots of boxes, tables, and footnotes—but the structure is standardized. Once you know where to look, it becomes much more approachable.
The Header
The top section sets the context:
- Issuer: The company name and ticker (who’s stock we’re talking about).
- Reporting person: The insider’s name.
- Relationship: Whether they’re an officer, director, or 10%+ owner (often checked boxes).
- Date of earliest transaction: The trade date being reported.
- Check boxes for things like whether the filing is an amendment.
You can usually answer “who is this, and how are they connected to the company?” from the header alone.
Table I – Non‑Derivative Securities
Table I is where ordinary stock transactions live—common shares, primarily.
Key columns:
| Column | What You Learn |
|---|---|
| Transaction Date | When the trade actually happened |
| Transaction Code | Why it happened (more on codes in a moment) |
| Securities Acquired (A) or Disposed (D) | Whether they bought (A) or sold (D) |
| Amount | Number of shares involved |
| Price | Approximate per‑share price |
| Amount of Securities Owned After | How many shares they hold after this trade |
This is the heart of the filing when you’re looking for classic insider buying or selling.
Table II – Derivative Securities
Table II covers options, warrants, convertible securities, and other derivatives.
| Column | What You Learn |
|---|---|
| Title of Derivative Security | What kind of instrument it is (stock option, RSU, etc.) |
| Exercise/Conversion Price | The price to turn it into common stock |
| Transaction Date / Code | When something changed and why |
| Expiration Date | When the derivative goes away if unused |
| Underlying Securities | How many shares the derivative represents |
| Ownership After | How many derivative units remain |
Derivative activity can be noisy—lots of grants, vesting, and option exercises—but it’s part of the wider ownership picture.
Transaction Codes: The Rosetta Stone
Each line has a transaction code that explains the nature of the move. You don’t need to memorize every letter, but a few matter a lot more than others:
| Code | Meaning | Why You Care |
|---|---|---|
| P | Open‑market or private purchase | Insider is buying with their own money—strongest positive signal. |
| S | Open‑market or private sale | Insider is selling—may or may not be negative depending on context. |
| A | Grant, award, or other acquisition | Stock or option compensation; usually routine. |
| M | Exercise or conversion of derivative security | Options turning into shares; neutral by itself. |
| F | Payment of tax liability by withholding shares | Shares sold/withheld for taxes; mostly noise. |
| G | Gift of securities | Estate or charitable planning; not a price signal. |
| J | Other acquisition or disposition | Catch‑all; requires reading the footnote. |
For most investing purposes, you pay the closest attention to P (purchases) and S (sales) in Table I. Everything else usually needs more context before it means anything.
Why Insider Trading Data Matters
Insiders are closer to the business than anyone else in the market. They see internal dashboards, competitive pressure, hiring plans, customer churn, and a hundred other signals that never hit a press release.
They’re not allowed to trade on material non‑public information (MNPI), but they are allowed to trade based on their general view of the company’s trajectory. Those trades, disclosed on Form 4, can add useful context to your view of a stock.
What the Research Suggests
Academic work on legal insider trading has consistently found that:
- Insider buying tends to be a positive signal for future returns, especially when it’s large and concentrated.
- Cluster buying—several insiders buying in a short window—has historically been more predictive than a lone insider acting alone.
- CEO and CFO trades carry more information than trades by lower‑level insiders or directors.
- Insider selling is noisy: selling often happens for life reasons (diversification, taxes, liquidity) and is less reliably predictive.
You don’t need to turn Form 4s into a black‑box factor model to use them. Simply knowing whether insiders are net buyers or sellers, and how aggressively, can help you calibrate your conviction.
Reading Insider Behavior in Context
A few patterns tend to matter more than others.
Cluster Buying
When several insiders buy in the same time window—especially when those insiders include the CEO, CFO, and independent directors—you’re seeing a collective signal. One person can be wrong or acting for personal reasons. A group, each spending meaningful money, is harder to dismiss.
You’ll often see this after a large drawdown, a controversial announcement, or a period of heavy negative sentiment.
Buying After Bad News
Sometimes a company reports weak earnings, issues cautious guidance, or gets hit with a regulatory headline. The stock drops, and then insiders buy.
Those purchases are often a way of saying, “The market overreacted. We think this is cheap.” They don’t guarantee a rebound, but they tell you management believes the future looks better than the current price implies.
First‑Time Buyers
When an insider who has never bought stock on the open market suddenly writes a check, that stands out.
Executives and directors often receive shares through grants or RSUs. Many never add their own cash. A first‑ever open‑market purchase, especially later in someone’s tenure, is worth paying attention to.
Size Relative to Wealth
Raw dollar amounts can mislead. A CEO making $20 million per year buying $100,000 of stock is making a small gesture. A director with a much smaller compensation package buying $500,000 of stock is making a real bet.
You may not know exact net worths, but you can at least relate the trade to disclosed compensation to get a rough sense of how “big” the trade is for that person.
Transactions You Mostly De‑Prioritize
Not every Form 4 line deserves equal weight.
Automatic sales under 10b5‑1 plans
Many executives pre‑program sales under Rule 10b5‑1, so shares are sold on a schedule regardless of news. Footnotes will usually mention this. These plans are often about diversification, not a real‑time view on the stock.Option exercise and immediate sale
When options are close to expiring, insiders exercise and may sell simultaneously to lock in value or pay taxes. That’s more about housekeeping than sentiment.Tax withholding (Code F)
When RSUs vest, a portion may be withheld to cover taxes. You’ll see this as shares “disposed of,” but it’s a tax event, not a decision to sell.Predictable, small director sales
Some directors routinely sell small amounts on a regular cadence. The pattern is more telling than any single trade; if it’s steady and boring, it’s probably just personal cash flow management.
These transactions still matter for ownership math, but they’re not usually the “tell” you’re looking for.
How to Track Form 4 Filings in Practice
You can, in theory, live on EDGAR and refresh all day. In practice, it’s easier to let tools do the heavy lifting.
Earnings Feed: Real‑Time, Company‑Centric View
Earnings Feed has an insider trading hub built around Form 4 filings:
- A stream of real‑time Form 4s as they hit EDGAR.
- Filters by company, insider, transaction code, and more.
- Company profiles that show insider activity alongside other filings.
- Integration with your watchlists, so you only see insider activity for names you actually care about.
This setup is especially useful if you want to monitor a portfolio and only dig in when something notable happens.
OpenInsider: Deep Insider‑First Lens
OpenInsider is more old‑school but very powerful for insider specialists:
- Detailed screens for cluster buys, big purchases, role‑specific trades, and more.
- Insider‑centric views—what a particular executive has done across companies.
- Long history of Form 4 data for backtesting patterns or just exploring manually.
It’s a great complement to a real‑time tool: you can spot a trade in Earnings Feed, then jump to OpenInsider to see the broader behavior pattern.
SEC EDGAR: The Canonical Source
When you want the original document, you go to EDGAR:
SEC EDGAR – Company Filings Search
Type in the ticker or company name, filter for “4,” and you’ll see every Form 4 on record. It’s not pleasant to use day‑to‑day, but it’s authoritative.
A Simple Insider Research Workflow
You don’t need a complicated system to get value from Form 4s. Something like this works well:
Weekly Scan
- Run a quick look for cluster buys across the market.
- Note any large open‑market purchases by CEOs/CFOs at companies on your broader watchlist.
- Flag names where insider buying lines up with a recent big move in the stock price.
Pre‑Investment Check
Before you buy a stock:
- Look back across the last 6–12 months of Form 4s.
- Ask whether insiders have been net buyers, net sellers, or roughly neutral.
- Note if any insiders bought at or above the current price—always interesting.
- Separate routine 10b5‑1 selling from discretionary trades.
You’re not looking for perfection; you’re looking for patterns that either agree with your thesis or give you pause.
Ongoing Monitoring
For your actual positions:
- Add the company to your Earnings Feed watchlist so you see Form 4s in real time.
- When a big trade appears (especially a CEO/CFO buy), stop and read the filing.
- If something feels off—heavy insider selling combined with other red flags—it’s a prompt to revisit your thesis.
Red Flags and the Legal Line
Form 4 shows legal insider trading. That’s the whole point of the system: trades are allowed, but they must be disclosed.
Legal insider trading includes:
- Insiders buying or selling during open windows, based on their general view of the business.
- Trades under pre‑planned 10b5‑1 programs.
- Transactions reported on Form 4 within the required deadline.
Illegal insider trading happens when someone trades on material non‑public information: a pending merger, an unannounced earnings surprise, a major contract win or loss, etc., and does so without proper safeguards. Those trades are not “obvious” from Form 4 alone—they’re usually detected through patterns and investigations.
What you can see in Form 4 are warning patterns that warrant extra attention in your overall research:
- A CEO selling unusually large amounts outside a disclosed 10b5‑1 plan.
- Multiple executives selling heavily just before a known catalyst, with no clear diversification story.
- A new CFO joining, then rapidly unloading stock without offsetting grants.
None of these are proof of anything on their own. They’re signals that deserve context from the rest of the filings, earnings calls, and news.
Summary: How to Use Form 4 Without Overfitting
Form 4 data is powerful, but it’s not magic. Used well, it gives you an extra dimension of information: what insiders are doing, not just what they’re saying.
A few practical rules of thumb:
- Treat open‑market purchases (code P) as the strongest single signal.
- Give extra weight to cluster buying and to trades by CEOs and CFOs.
- Be cautious about single, routine sales—especially those under 10b5‑1 plans or tied to tax events.
- Always interpret insider data in context: valuation, fundamentals, recent news, and your own thesis.
- Use Form 4s to tilt your conviction, not to replace actual company analysis.
Think of insider data as a good second opinion from the people inside the building—not as a substitute for doing your own work.
Track Insider Trading for Free
If you want to make insider activity part of your normal routine instead of an occasional curiosity:
- Create a free watchlist on Earnings Feed and get Form 4 filings for your names as they hit EDGAR.
- Explore the insider filings hub to see what executives and directors across the market are doing right now.
- When something stands out, open the 10‑K, 10‑Q, and 8‑Ks for that company and decide whether the insider move fits or contradicts the story you see.
The filings are already public. The question is whether you’re seeing them in time to make them useful.