There are plenty of ways to know if there is an insider trading in a particular stock. You have to understand five things:
Insider trading is done by big money with access to information that general public is unaware of.
Whole point of insider trading is to gain from a particular direction. Either make money by selling a stock that is going to fall due to bad news or by buying a stock that is going to rise due to good news. There can be variety of factors like new product introduction, bad quarterly results, government policy etc. any thing that can impact the price for considerable time and is not known to public.Retail money enters the market with Technical Analysis, Risk Management and Position Sizing whereas Big Money enters the market with information.
Retail follows the chart whereas Big Money makes the chart.
With the combination of Technical and Data Analysis it is possible for retail investors to understand what the big money is doing and position accordingly but it is extremely difficult, time consuming and exhausting. Even after that, it is not conclusive so you have to decide whether it is worth it or not. I tried it, caught some moves, personally gave up, because my bread and butter is when I am making money on weekly basis to pay the bills with surety. Plus These type of trades comes once in a month or 2 months. One cannot sit idle through all this time.
Big money does not make position for 5 or 6 days. Their positions can run from a month till several months.
Before you read any further, understand some basic information or disclaimer from my side:
Over the last 4 months, I have tried many methods including Intraday, Stock Futures (as requested by you in question) but finally settled on focusing on only 1 primary trading system that I myself developed and had an accuracy of 80% and bare minimum risk. Every Rupee you have is your soldier. You decide to send it out everyday in order to capture more soldiers or let it die. I prefer to capture more soldiers and increase it, hence I have stopped experimenting with money and only deploy it where probability is high and risk is minimum. My own developed systems gives me more confidence so that is where I deploy it but that doesn’t mean the other things I know are of no use. It simply means I am much more comfortable in Options than stock futures.
Let us consider chart of Hero Moto Co on 25th Oct 2019. It was giving me Sell Signal or was telling me that it is going to fall considerably.
Interpretation was simple:
OI was increasing which meant smart money was building position. To which side it was not known but activity had increased. I placed a horizontal support line below which with technical analysis, it would confirm. Till now only data analysis was telling that position is being builtup.
In the second image between 2 vertical lines, see how in small candles OI increased. Followed by black bearish big candle. Positions are built.
In 3rd image, check the option chain of Hero Moto Co for 4th November 2019. On the left calls were witnessing short buildup with 1,28,000 contracts on 2700, 2750 & 2800 strikes where as puts were witnessing long buildup with buying of 39000 volume which was a bearish signal based on data analysis. Data Analysis is nothing but money flow.
So First we saw position buildup by big money. Secondly followed by confirmation on Technical Charts and Thirdly by Option Chain. See the result post that. Increased OI itself tells that big money participated. Now it is not illegal for big money to participate but as a retail I know that If big money is doing something than it is based on a reason or information that I do not have. I have to follow them.
Let us take a recent example of Tata Motors now:
On 19th Feb 2020, horizontal support was broken and see how Open Interest increased which meant big money was building position on Tata Motors futures.
Now see the Option Chain on 19th Feb 2020.
Magenta - 50 Lakh volume of calls was written
Cyan - ATM puts were unwinded means big money left this positions as they would have lost big here.
Green - Long Buildup on Put happened.
First, big money created a position on futures, followed by a signal on technical analysis and further confirmation on data analysis. Fall is self evident. Now we may say that it is the effect of coronavirus or any thing but big money was active and could have been known.
Let us take recent example of Bank Nifty based on Data Analysis alone:
On 3rd March 2020, Bank Nifty made a good intraday recovery and made a bullish candle by end of day. When I checked the data at the end of day, I came across following on Monthly Option Chain which left me amazed. Option writers at 28500 and 28000 puts were unwinding there positions and running. If market had to bounce, as a writer they shouldn’t run. Instead they were running which was fishy. In two days we were standing at 27500 on Bank Nifty. Big money was indeed running even when we had a pretty good intraday recovery.
One last example. Consider a case of 14th February 2019 on Tata Motors.
Points to consider:
Even after a recent fall on 8th Feb 2020, on 14th Feb 2020, see how call unwinding happened from 150–200 level calls.
Unwinding happened till 200.From 200, price reversed.
If this is not insider information on 14th February 2020 then I don’t know what is.
But one thing is pretty clear that it can be spotted by Technical Analysis combined with Data Analysis but it is pretty time consuming and tough. Secondly, in hindsight it might be easy to tell but needs a lot of conviction to act on it while it is unraveling.