www.zacks.

com/insidertrader

Zacks Investment Research, Inc. | 10 S. Riverside Plaza, Suite 1600 | Chicago, Illinois 60606
Contents
Introduction 2

Section 1: The Mental Aspect 4

Section 2: Getting the Most Out of the Insider Trader 5

Section 3: Follow the Leader 6

Section 4: How to Read Insider Trader Alerts 7

Section 5: How to Read Insider Trader Daily Summary 9

Section 6: Virtues of Money Management 10

Section 7: Tying it All Together 11

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Introduction:
Congratulations on getting
started with Zacks Insider Trader.
This top secret service allows select Zacks customers access to the best stocks that insiders are
buying for their own portfolios. When the insiders get greedy, so will we.

Insiders are defined as officers, directors and owners that hold more than 10% of company stock.
Many people think only of CEOs and CFOs when they think of insiders, but insiders can also be
the General Counsel, the head of Human Resources or the Vice President of Operations for Latin
America.

Insider trading is perfectly legal as long as the “insiders” report their activity to the SEC. This is
done by filing a “Form 4” form with the SEC within 2 business days of the transaction. Because of
these strict rules, it’s possible to see, in a timely manner, what “those in the know” are doing with
their stock and their money.

Since corporate insiders are generally believed to know more about the future direction of
their company and thus the possible future direction of their stock, tracking insider activity has
proven to be both insightful and profitable. In fact, studies have shown that insider trading can
outperform the market.

We’ve all heard about celebrity CEOs like Michael Dell of Dell Computer buying big chunks of
stock in their companies and how the stock has taken off afterwards. But most investors never
hear about the non-celebrity CEOs and top ranked officers when they buy their stock.

After all, who cares when the top lawyer at a little known mid-cap company buys 500 shares of
company stock?

We do!
For many insider buys, the results are the same; outsized gains.

Of course, not all insider activity is statistically important, but certain types of insider transactions
have proven to be highly predictive. And these are the ones that the Zacks Insider Trader focuses
on.

We of course start off with our time tested Zacks Rank to put the odds of success in our favor
right from the start. Then we add our Insider Trader analysis. We do this by looking at the number
of insiders buying the stock and the accumulation period. Was it a “swarm buy”, with several
insiders buying, or a single massive buy by the CEO? Sometimes the sheer size of a single insider

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purchase is enough for us to get on board.

And with a holding time of anywhere from several weeks to several months, our goal is to do this
again and again as insiders are forced to show their hand.

You’ll see you don’t have to be an insider to profit like one.

Before you begin, please be sure to read the rest of this guide as it will help you get the most out
of this service. If at any time you have questions or comments, please feel free to contact us. We
want to hear from you.

Thanks again and good trading.

Sincerely

Tracey Ryniec
Editor, Insider Trader
Stock Strategist- Zacks.com

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Section 1:
The Mental Aspect
It is important to realize how much investment success is related to what goes on between your
ears. There are so many ways to get distracted and to question yourself while trading. You must
be in the right frame of mind and have reasonable expectations to achieve success with this or
any investment service. So be sure to pay attention to the tips in this section carefully; they will
get you headed in the right direction.

NOBODY IS 100% PERFECT

First of all, there will be losing picks, but if we cut them out early to minimize losses and maximize
gains on winners, then we can achieve phenomenal results.

A little known fact is that the Zacks Rank, even with its nearly +25% average annual return, is only
right 56% of the time. We are extremely confident that over time we will produce substantial
returns, but it is important that you learn to take the losing picks in stride.

COMPOUND YOUR RETURNS

The Insider Trader uses a system that identifies insider accumulation of a small subset of stocks
to achieve its vast outperformance. Companies with officer accumulation tend to experience
exceptional gains. However, while there will be some big winners, it is having consistent smaller
gains that will really add up over time.

This is what we call the beauty of compounding and how it works to an investor’s advantage.
Albert Einstein is said to have called compound interest the eighth wonder of the world and this
is a prime example. So don’t get discouraged when you are “only” seeing small gains on each
respective trade, because that is exactly what this product is designed to do.

TIMELINESS INCREASES ROI

Let me ask you a question. Would you rather make 10% or 20% on a trade?

Yes, it’s a trick question. The missing piece of the puzzle is how long each trade was held. So now
let’s say that the 10% gain was made in 3 months time, which computes to a 46% annual return.
On the other hand, the 20% winner took 2 years to achieve and is really only good for a 10%
annual gain.

This example solidifies the power of timely stock trading that we will harness with this service.
Most often we will only be holding on for a few months and stringing together a series of smaller
winners. But from time to time we let winners run longer.

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Section 2:
Getting the Most Out of
Insider Trader
It is our job to provide you with timely and profitable stock picks, but there are steps that you can
take to ensure your success with Insider Trader. Here are a few things you can do to get the most
out of the product.

1. Read this guide carefully

„„ This guide is your friend. It has valuable information on how to use the product and
succeed with the assistance of Insider Trader.

„„ It gives you step-by-step instructions on how to receive alerts and what to do when
you receive them.

„„ It has important money management tips.

2. Have a working email address

„„ This is necessary to receive trading alerts. Make sure you can access your email in a
timely fashion because acting on trades is essential to success.

„„ The Daily Summary email will be sent at 8:00 p.m. EST, which summarizes the positions
as well as what happened on Wall Street during that trading day.

„„ Intra-day trading alerts, while rare, will typically be sent within the first hours of the
trading day.

„„ Unfortunately, many Internet service providers have software programs that filter out
emails you want to receive, like Zacks Insider Trader Daily Summaries. To get optimal
delivery of our emails follow this link for quick and easy instructions.

3. Have an online trading account

„„ We are not advocating any particular company for this, but ideally lower commissions
will help you achieve a higher overall return. You will make several trades a month,
and high commissions can really eat into your profit margin, especially if you have
limited capital.

4. Access the site

„„ To access the site, go to www.zacks.com/insidertrader and enter your username and

password. This will take you to the main page where you can view the portfolio, any
pending trades, and the commentary.

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Section 3:
Follow the Leader
The process to receive our trades is very simple, yet we feel it is so important that we are going to
spell it out for you. Here are the four steps.

Here are the four steps:

„„ Receive the email with the daily summary or intra-day signal.

„„ Read the email to determine appropriate action.

„„ Place trades through your broker with the appropriate % allotted.

„„ Follow the daily summaries to determine when to sell.

ACT PROMPTLY = MOST SUCCESS

And if you don’t beat the market, you can take advantage of our 100% Money Back Guarantee.

SPEAKING OF THE GUARANTEE..........

We feel that if we are not able to live up to our word and help you beat the market then we
shouldn’t be deemed worthy enough to take your money. So in addition to the 90-day, no hassle
guarantee, there is a 100% Money Back Performance Guarantee.

There are a few conditions that have to be met first, but the bottom line is that we have to
perform. Click here for details.

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Section 4:
How to Read Insider Trader Alerts
From time to time, this strategy will have a trading alert during the trading day. When a Buy
Alert or Sell Alert is sent out, you should receive the alert within the first hours of the trading day
detailing what stock is being added or sold and the rationale behind the move. It is important
that you act as soon as you can. Here is an example:

Signal = The type of alert. It will be a

green ball to initiate a position or a
red ball to close a position.

Company Name = The name of the

company that is being added to or
sold from the Insider Trader portfolio.

Symbol = Ticker symbol of stock

being added to or deleted from the
portfolio.

Date Added = The date on which the

stock was added to the portfolio.

Mkt Val % = The percentage of your

allotted portfolio to allocate to this
position

Insider Trader Portfolio Commentary

= As part of the alert, Tracey will explain
her rationale for the addition. You
will learn her reasoning for adding or
selling the stock and the current price
at which the stock is trading.

Intraday alerts use the average of the price at the time of the alert and the closing price that day.

Recommendations that use stops or limits will use that price for performance figures.

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Section 5:
How to Read
the Insider
Trader Daily
Summary
The Daily Summary provides a wide array
of details for Insider Trader each trading
day. This summary may have new signals
as well as the current open portfolio with
daily commentary. The % allocation for
each stock is also shown. This is valuable
information as it conveys what our game
plan is, why we are in each stock, when to
get out and why, as well as any relevant
news. This is emailed to you at 8:00 p.m.
EST. In regards to the price added/deleted
for the portfolio, Zacks uses the average of
the price at the open and the closing price
on the day the stock is added or deleted.

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Section 6:
Virtues of Money Management
Money management can be the difference between realizing large gains and going broke, even
if the winning percentage is the same. How can this be? The key point is that winning investors
know to ride their winners and cut their losses quickly, and to stick with a plan that has proven
to work in the past.

Here are a few rules that you can follow to further improve your returns:

First of all, don’t dump your entire portfolio into these Insider Trader picks. Only allocate that
portion of your capital that can be comfortably devoted to speculation.

This portfolio will typically hold around 7 positions. You should be able to sleep soundly and act
rationally if you are only trading with your speculative money.

Keep in mind that reinvesting profits and the power of compounding are your friends in this
portfolio. Those frequent singles add up to large gains in the end when the phenomenon of
compound interest works its magic.

EVER-PRESENT CLICHÉ RINGS TRUE

The Insider Trader is a great service, no doubt. It has been said millions of times before, but it is
so important it needs to be said again: Don’t put all your eggs in one basket. Even if you are the
most brilliant investor in the world, there will be losing trades. The key is staying in the game and
building your equity over time in a systematic way. This can only be done when diversification is
put to use.

Not that we have to remind you, but the main point is that your capital was earned through years
and years of hard work. Capital conservation sounds boring, but without it, you are fighting a
losing battle. We don’t want to see the money you have put your blood, sweat, and tears into
evaporate due to lack of discipline.

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Section 7:
Tying it All Together
It is our goal at Zacks to enhance your trading results via the Insider Trader service. This booklet
touches upon the details of the service and provides several useful tips to realize the vast potential
that insider trading can yield. We feel it is our job to let you know that we are here to help you get
the most out of Insider Trader.

Again, let’s go over some of the important points made in this booklet.

„„ Small Gains Add Up To Big Results

„„ Not Every Trade Will Be A Winner

„„ Timeliness Is Of The Essence

„„ Money Management Matters Greatly

„„ Have A Working Email Address

„„ We Are Here To Help

The last point is important as we have free customer support that should be taken advantage of.
Any additional questions that you may have can be answered by just picking up the phone and
giving us a call or emailing us:

1.888.775.8348

(outside the US, 1.312.265.9309)

insidertrader@zacks.com

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