Your Guide to Profiting This Earning Season

This article originally appeared on Traders Reserve . Q2 earnings season “officially” kicks off next week with Alcoa’s (NYSE: AA ) earnings report scheduled to be released April 11. So now is the perfect time to cover some ground rules for trading earnings. The market is far from efficient. As a result, traders are presented with opportunities to capitalize on market pricing in the market that misses the mark. All that is needed is a trigger and a game plan for maximizing profits and minimizing losses, and one of the best triggers for trading opportunities is the quarterly earnings report. Publicly traded companies rarely release information about operating results. Investors are left to guess how companies are performing. When earnings are released we see just how inefficient the market can be with how it prices a stock. It is not uncommon to see a stock move higher by 5%-10% after earnings are released. That is not bad for a short-term trade — assuming you are on the right side of the equation before the news is released. Is it possible to accurately predict how an earnings report will go and the subsequent trading action after the news is released? The answer is yes, and you would be surprised at how easy it is. Last year, I began writing a column for a large financial website offering traders recommendation on stocks releasing earnings that week. Since the article first appeared in November, I have had a number of winners including some big gainers. I’ve had several picks go up more than 10% with my biggest gainer jumping more than 30% after releasing earnings. Sure, I have had my losers too, but for the most part investors won big following my advice. Here is a summary of the five keys that I follow when making my recommendations: #1 Current Stock Price It may be surprising, but the current stock price of a company about to report earnings can provide traders clues with respect to future action. Has the stock been running up in advance of the report? Where is the stock trading versus the rest of the market? Has the company released guidance in advance of the earnings report? What other news out there is impacting the current stock price? The answer to these questions will give you clues as to the future. For example, if a stock is trading flat when the rest of the market is rising, there is potential for big gains when earnings are released. Investors tend to get nervous in advance of earnings. The concern is a stock losing value on a bad report. If the report is strong, the reaction to the upside is powerful in that traders are making up lost ground while they waited for the report to be released.
Negocioenlinea
tdp2664
gol2664
InvestorPlace