New Twist on How to Use Earnings Season for Trading Stocks
Most Earnings Season Stock Trading Strategies involve either trading the stock or its options a few days before the Earnings Report is released. However, much of the gains are already over if you focus only on the few days ahead of the stock’s Earnings Report.
But what if you are not a Day Trader or Swing Trader? How can a Position Trader take advantage of Earnings Season opportunities and earn excellent profits?
They can, but unlike the Day Trader who trades intraday on the day of the announcement, hoping they can get in ahead of the High Frequency Trading gap, or hoping the run will continue after the announcement gap, a Position Trader enters much earlier and holds during the few weeks or month prior to the Earnings release.
This actually provides significantly higher income than Day Trading and has much lower risk.
Immediately after an Earnings Season concludes, the Dark Pools are already assessing the next Earnings Season because that fundamental data is already in play in terms of the pricing of that stock. The Giant Funds typically are aware of how the company is doing for the next quarter, which is already underway for at least a month when the prior quarter’s Earnings results are released.
Earnings Reports are a lagging indication of how the company is doing.
Current monthly data is accessible to the Giant Funds and they use this to determine whether to accumulate more stock, or rotate out, lowering held inventory of that stock to purchase another stock with higher growth potential for the next quarter.
This gives the part-time trader, or anyone who is too busy to day trade, a huge advantage over Day Traders who must time their entries so precisely that they often spend 40 – 80 hours a week just trading. By using the Position Trading methodology taught in the Methodology Essentials Course, those traders who only have a few hours a week to trade can trade the Earnings Season without any hassle or extra work.
Example of a Position Style Earnings Season Stock Trading Strategy
The chart example below is a good example of an early position trade entry that provided excellent Return on Investment. An early Earnings Report entry resulted in an easy trade that required minimal effort to monitor but huge Return on Investment profits.
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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